Fixed vs tracker mortgages, explained

Fixed-rate mortgages

With a fixed rate, your interest rate — and so your monthly payment — stays the same for a set period, commonly two or five years. The certainty makes budgeting easy and protects you if rates rise. The trade-off is that you will not benefit if rates fall, and early repayment charges usually apply if you leave early.

Tracker mortgages

A tracker follows a reference rate — usually the Bank of England base rate — plus a set margin. If the base rate falls, your payments fall; if it rises, they rise. Trackers can be cheaper when rates are stable or falling, but they carry the risk of higher payments if rates climb.

Standard variable rate (SVR)

When a fixed or tracker deal ends, you usually move onto the lender’s standard variable rate, which is often higher. The lender can change it largely at their discretion. Most people look to remortgage before this happens.

Which should you choose?

There is no universally right answer — it depends on your appetite for risk, how tight your budget is, and how long you plan to stay. If certainty matters most, a fixed rate appeals. If you can absorb some movement and think rates may fall, a tracker might suit. This is exactly the kind of trade-off we help you weigh up.