Two-Year or Five-Year Fixed Mortgage?

Payment certainty and flexibility

A five-year fix can reduce the need to choose another product during those five years, but may have early repayment charges if you need to leave. A two-year fix reaches the next decision sooner, when rates and your eligibility may be different.

Porting does not guarantee that a lender will accept your next home or additional borrowing. Consider moving plans, income changes and possible overpayments alongside the initial monthly payment.

Use a meaningful comparison period

Over five years, a two-year fix involves uncertainty about later rates and potentially further product fees. Comparing only the first two years with a five-year product leaves that uncertainty out. You can examine several scenarios, but none is a forecast.

A longer initial fix does not always have a higher rate than a shorter one. Pricing changes with funding conditions and the actual lender range. Obtain current illustrations rather than relying on an undated hierarchy of rates.

Check the details of both actual offers

• Initial rate and period, product fee and remaining repayment term.
• Early repayment charges and overpayment allowances.
• Porting terms and how additional borrowing would be treated.
• The rate or product choice after the initial period.
• How a future payment increase would affect your budget.