Should you fix for two years or five?

A two-year fix keeps you flexible and lets you re-price sooner, but exposes you to whatever the market looks like in two years and means paying fees again. A five-year fix buys certainty and locks in today's pricing for longer, but ties you in — and leaving early can trigger a substantial early repayment charge. The right choice follows from your plans and your tolerance for payment uncertainty, not from a rate forecast.

The real question isn’t which rate is lower

Answer first: the choice between a two-year and a five-year fix is about flexibility versus certainty — not about which headline rate is lower today.

A two-year fix means you re-price sooner. If rates fall, you benefit earlier. But you’re also exposed to whatever the market looks like in two years, and you’ll pay arrangement fees and go through the process again. A five-year fix locks today’s pricing for longer and buys you a payment you can plan around — but ties you in, with an early repayment charge if you need to leave.

Everything else is detail. And crucially, whichever you choose, you’re not really choosing based on where rates are going — because nobody knows that. You’re choosing based on what you need from the next few years.

Compare total cost, not headline rate

The single most common mistake is comparing the two rates and stopping there. The fair comparison is total cost over the same period — say five years.

On a two-year fix, you’ll typically pay the arrangement fee twice within that window (once now, once at re-mortgage), plus any remortgage costs both times. And the second half of the period is priced at an unknown rate. So a two-year deal that looks cheaper today can easily cost more across five years — or considerably less. The point is that the headline gap doesn’t tell you.

Model both on the repayment calculator, and be honest that the back half of the two-year path is a guess. That guess is the risk you’re taking.

When the two-year fix makes sense

You expect your circumstances to improve. This is the big one for contractors. If your income is rising, your trading history is lengthening, or your loan-to-value is falling fast, a shorter fix lets you be re-assessed sooner — potentially into a better rate band and a more generous lender. Locking in for five years at your current profile can mean paying for a position you’ve since outgrown.

You might move. If a house move is plausible within a few years, a shorter fix reduces the chance of colliding with an early repayment charge — though check whether the deal is portable, which can solve this without a shorter fix.

You want to re-price into a falling market sooner. A legitimate view, provided you accept it cuts both ways.

When the five-year fix makes sense

You want a payment you can plan around. For a contractor whose income already varies between contracts, having one number that doesn’t move can be genuinely valuable — it’s the fixed point in an otherwise variable budget. Don’t underrate that.

You’re staying put. If you have no plans to move and no expectation of repaying early, the flexibility of a two-year deal is a benefit you’ll never use, and you’re paying for it in re-pricing risk and repeated fees.

You’d rather not do this again in two years. A real consideration. Remortgaging has a cost in time, paperwork and mental energy, and doing it less often has value.

The early repayment charge is the thing to check

If there’s any real chance you’ll move, repay a lump sum, or need to leave the deal, the early repayment charge can matter more than the rate. It’s typically a percentage of the balance, often reducing over the deal, and on a five-year fix it can be substantial in the early years.

Ask two questions before committing to a longer fix: what would it cost me to leave in year two? and is the deal portable if I move? A five-year fix you can port is a very different product from one you can’t. It’s a detail that people skip, and it’s the one most likely to hurt.

The contractor angle

Here’s what’s specific to you. Your assessable income can change materially in a way that a salaried borrower’s rarely does — a longer trading history, a stronger contract, incorporation, or simply finding a lender that reads your day rate properly can transform what you can borrow and the rates you can access.

If you’re currently with a lender that undervalues your income, being locked into a five-year deal with them is locking in the undervaluation. In that situation a shorter fix — or better, moving now to a lender using contract-based underwriting — can be worth far more than a modest rate difference.

Conversely, if you’re already well-placed with a lender that reads you correctly, and your income is stable, the certainty of a five-year fix is a legitimate prize.

The bottom line

Two years buys flexibility and an earlier re-price, at the cost of fees paid twice and exposure to an unknown future market. Five years buys certainty and locks today’s pricing, at the cost of being tied in. Compare total cost over the same period, check the early repayment charge and portability before choosing a longer fix, and — if you’re a contractor whose income or lender fit is improving — recognise that a shorter fix keeps the door open. To weigh both against your own plans, speak to an adviser.

Pricing referred to above was accurate on 11 July 2026 and changes frequently. General information only — not a personal recommendation.