Guide · 4 min read
2-year or 5-year fix for a buy-to-let?
How long you fix doesn't just set your rate for a while. It changes the rate a lender tests your rent at, so a 5-year fix can let you borrow more.
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Key points
- Lenders test the rent at your own rate on a fix of 5 years or more, but at your rate plus 2 points on a shorter fix or a tracker, and never below 5.5%.
- So a 5-year fix can let you borrow more. On our example, a Income tax bandsIn England and Wales: no tax on the first £12,570 (the personal allowance), 20% basic rate up to £50,270, 40% higher rate up to £125,140 and 45% above. Rent is added to your other income, so it's taxed at your top rate. From April 2027, property income has its own rates: 22%, 42%, 47%. could borrow about £165,000 on a 5-year fix but only about £134,000 on a 2-year one.
- A 2-year fix is often a little cheaper and frees you sooner, but in two years you face a new rate, new fees and possibly a new lender's test.
- A 5-year fix gives certain costs for longer, but usually bigger charges if you sell or RemortgageReplacing your mortgage with a new one on the same property, from a new lender or your current one (a product transfer). People do it for a better rate or to release equity. early.
How the fix changes what you can borrow
Buy-to-let lenders lend on the rent: it has to cover a year's interest, worked out at a test rate, 1.25 times for a basic-rate taxpayer or a company and 1.45 times for a higher-rate taxpayer. How much can I borrow for buy-to-let? explains the test in full.
The Bank of England's rules ask lenders to allow for rates rising over the first five years of a loan, unless the rate is fixed for at least that long. So on a shorter fix they test at your rate plus 2 points; on a 5-year fix, at your rate.
Take our example: a £180,000 house let for £1,100 a month, with a 75% loan of £135,000. Say a 2-year fix costs 4.75% and a 5-year fix 5%. These are example rates to show the working, not today's best buys.
| Fix | Rate | Tested at | Basic-rate or company | Higher-rate |
|---|---|---|---|---|
| 2 years | 4.75% | 6.75% | £156,000 | £134,000 (short) |
| 5 years | 5% | 5.5% | £192,000 | £165,000 |
The 2-year fix is cheaper, but it's tested at 6.75%, so a higher-rate taxpayer can't get the full £135,000 on it: the rent supports about £134,000. The 5-year fix, tested at 5.5%, supports £165,000, even though its rate is higher.
This matters most when the rent is tight for the price, which is common in London and the South East, or when you pay higher-rate tax. Our buy-to-let mortgage calculator runs the lender's test on your own price and rent.
Which costs less?
Over five years on Interest-only mortgageYou pay only the interest each month (the loan × the yearly rate ÷ 12) and owe the whole loan at the end., the 5-year fix costs £33,750 in interest. The 2-year fix costs less at first, but after two years you need a new deal for the next 3, usually with another Arrangement feeWhat the lender charges to set up the mortgage. You can usually add it to the loan, but then you pay interest on it.:
So the 2-year fix only works out cheaper if you can get a new deal below about 4.92% in two years' time. Nobody knows where rates will be, so the real question is whether you'd rather know your costs now or keep the freedom to move. Meanwhile the 2-year fix leaves more each month: £338 rather than £310 after every cost.
Flexibility and exit fees
- Early repayment charges. Most fixes charge a percentage of the loan if you pay it off during the fix, for example to sell or to remortgage elsewhere. It often falls each year. A 3% charge on a £135,000 loan is £4,050.
- Moving the loan. Many fixes can move to another property with you (Porting a mortgageTaking your mortgage deal with you to a new property, so you avoid an early repayment charge. The lender has to approve the new home and you again.), which helps if you sell one rental to buy another. Early repayment charges and porting your mortgage covers both in detail.
- The end of the fix. Under the Bank of England's rules, lenders don't have to re-run the Interest cover (ICR) and the stress testThe rent divided by the mortgage interest. Lenders test it at a higher 'stress' rate (your rate plus about 2 points on a shorter fix, and not below about 5.5%) and usually want at least 1.25, or 1.45 from higher-rate taxpayers. when you remortgage without borrowing more. Borrowing more means passing it again at the rates of the day, so a 2-year fix that ends when rates are high can leave you with fewer choices.
- Releasing equity. If you plan to remortgage to take cash out, perhaps after doing the house up, a shorter fix or a tracker avoids a big charge.
Trackers and variable rates
A tracker follows the Bank of England's base rate, so your payments go up and down with it. Lenders test it like a short fix, at the rate plus 2 points, so it supports a smaller loan. Many trackers have no Early repayment charge (ERC)A fee for paying off a mortgage, or too much of it, during its deal: a percentage of the loan that usually falls each year of the fix. Moving the mortgage to a new home (porting) can avoid it., which suits a landlord who expects to sell or refinance soon. When any fix ends you move to the lender's standard variable rate, which is usually much higher, so plan the switch a few months before.
Which suits you
- A 5-year fix if you want to borrow as much as the rent allows, plan to keep the property, and want to know your costs.
- A 2-year fix or a tracker if you plan to sell, refurbish and refinance, or release equity within a few years, or you expect rates to fall and the deal still pays if they don't.
- Either way, check the deal still pays at a rate 2 points higher: that's the rate you might face when the fix ends.
Common questions
Is a 10-year fix worth it for a buy-to-let?
It can be, if you plan to keep the property and want certain costs. Like a 5-year fix, it's tested at your own rate rather than 2 points higher, so it supports a bigger loan than a short fix. But early repayment charges can run for most of the ten years, which makes selling or remortgaging early costly.
Is a 3-year fix tested like a 2-year fix?
Yes. Any fix shorter than 5 years is tested at your rate plus 2 points, so a 3-year fix supports no more than a 2-year one at the same rate. A rate fixed or capped for 5 years or more is tested at the rate itself. Either way, most lenders test at no less than 5.5%.
Is a 5-year fix always dearer than a 2-year fix?
No. Fixed rates follow what the markets expect interest rates to do, so when cuts are expected, a 5-year fix can cost less than a 2-year one. Compare the whole cost over the time you'll keep the loan, fees included. Our example assumes 4.75% for 2 years and 5% for 5.
What is a discount rate buy-to-let mortgage?
A variable rate set at a fixed amount below the lender's own standard variable rate for a period. It moves whenever the lender changes that rate, not only when the Bank of England does. Lenders test it like a tracker, at your rate plus 2 points, so it supports a smaller loan than a 5-year fix.
Figures from our calculator, on the rules in force today, checked against GOV.UK and the Welsh Revenue Authority on 8 October 2026. Not financial or tax advice: check your own case with an accountant.