Buying a home

Fixed vs variable mortgage rates explained

Choosing a mortgage can feel daunting, and one of the first decisions is whether to go for a fixed or a variable rate. In plain English, a fixed rate keeps your payments the same for a set period, while a variable rate can move up or down over time. Here is how each works and how to weigh them up.

What is a fixed rate mortgage?

With a fixed rate, your interest rate is locked in for a set period, commonly two, three or five years. Your monthly payment stays exactly the same for that whole period, whatever happens to interest rates in the wider economy.

The upsides: certainty and easy budgeting, and protection if rates rise. The trade-offs: you will not benefit if rates fall, and there are usually early repayment charges if you leave the deal early.

What is a variable rate mortgage?

With a variable rate, your interest rate can change over time, which means your monthly payments can go up or down. There are a few common types:

  • Tracker: follows the Bank of England base rate plus a set percentage, so it moves directly with the base rate.
  • Standard variable rate (SVR): the lender's own default rate, which you often move onto when a fixed deal ends. It tends to be higher.
  • Discount: a set discount off the lender's SVR for a period.

The upsides: you benefit if rates fall, and there are often no early repayment charges on tracker deals. The trade-offs: your payments can rise, which makes budgeting harder.

Variable rates are closely tied to the Bank of England base rate, which is 3.75% at the time of writing. When the base rate changes, tracker and variable payments usually change with it, while fixed payments stay put until the deal ends.

How to decide which is right for you

It comes down to certainty versus flexibility. If a steady, predictable payment matters most, or your budget is tight, a fixed rate gives you peace of mind. If you could handle your payments rising and want to benefit if rates fall, a variable rate may appeal. Your deposit, how long you plan to stay, and your view on where rates are heading all play a part.

This is general information rather than financial advice. Everyone's circumstances are different, so it is worth speaking to a qualified mortgage adviser who can recommend the right deal for you.

Not sure where to start? Our team can point you towards a trusted local mortgage adviser, and our buying guide walks you through the wider process.

Frequently asked questions

What is the difference between a fixed and variable mortgage?

A fixed rate stays the same for a set period, so your payments do not change. A variable rate can go up or down over time, often in line with the Bank of England base rate, so your payments can change.

Is a fixed or variable mortgage better?

Neither is always better. A fixed rate gives certainty and easier budgeting, while a variable rate can be cheaper if rates fall but riskier if they rise. The right choice depends on your budget and how much certainty you want.

What is a tracker mortgage?

A tracker is a type of variable mortgage that follows the Bank of England base rate plus a set percentage. When the base rate changes, your rate and payments move with it.

What happens when my fixed rate ends?

When a fixed deal ends you usually move onto the lender's standard variable rate, which is often higher. Many people remortgage to a new deal before that happens to avoid a jump in payments.

Need a steer?

Speak to a mortgage adviser

The right mortgage depends on your circumstances. Give us a call and we can point you towards a trusted local mortgage adviser to talk through your options.

Call us on 01689 490050