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Choosing between a fixed or variable mortgage rate is one of the biggest decisions you’ll make when arranging a mortgage. Both options have their advantages, and the right choice depends on your circumstances, your budget and how comfortable you are with changes to your monthly payments. In this guide, we’ll explain the differences between fixed and variable mortgage rates, the benefits and drawbacks of each, and how to decide which may be right for you.
A fixed rate keeps your monthly mortgage payments the same for an agreed period.
A variable rate can go up or down during your mortgage term.
Tracker mortgages usually follow the Bank of England Base Rate.
Variable rates may be cheaper if interest rates fall, but your payments could increase if rates rise.
The best option depends on your circumstances, budget and attitude to risk.
How HTG Mortgages Can Help
At HTG Mortgages, I work with over 120 lenders across the UK, meaning we have access to a wide range of mortgage products to suit all types of borrowers. Whether you’re a first-time buyer or looking to remortgage, we can help you determine how much you can borrow and find the right mortgage for your circumstances.
We also provide ongoing support, regularly checking your options after your mortgage is secured, ensuring that you never miss out on a lower rate.
What Is a Fixed Rate Mortgage?
A fixed rate mortgage keeps your interest rate the same for a set period, typically between two and ten years. Because the interest rate doesn’t change, your monthly mortgage payments remain the same throughout the fixed period.
Many buyers choose a fixed rate because it offers certainty and makes budgeting easier.
What Is a Variable Rate Mortgage?
A variable rate mortgage has an interest rate that can change over time. This means your monthly payments could increase or decrease depending on how the rate changes.
There are several different types of variable rate mortgage, including tracker mortgages, discounted variable rates and Standard Variable Rates (SVRs).
What Is a Tracker Mortgage?
A tracker mortgage follows the Bank of England Base Rate, plus a fixed percentage set by your lender.
For example, if the Base Rate increases, your mortgage payments will usually increase too. If the Base Rate falls, your monthly payments may reduce.
Speak to an expert
Whether you’re buying your first home, moving house or remortgaging, HTG Mortgages is here to make the process as simple and stress-free as possible. I’ll compare mortgages from over 120 lenders, guide you every step of the way and help you find the right mortgage for your circumstances.
What Is a Standard Variable Rate (SVR)?
A Standard Variable Rate is the lender’s default mortgage rate.
Many borrowers move onto the SVR when their initial mortgage deal ends if they don’t remortgage or switch to another product.
SVRs are often higher than introductory mortgage rates, which is why many homeowners review their options before their current deal expires.
Fixed vs Variable Mortgage Rates
Fixed Rate Mortgage
A fixed rate mortgage may be suitable if you:
- Prefer predictable monthly payments.
- Want protection against future interest rate increases.
- Like knowing exactly what your mortgage will cost each month.
- Have a tighter household budget.
Variable Rate Mortgage
A variable rate mortgage may suit you if you:
- Can comfortably manage changes to your monthly payments.
- Believe interest rates may reduce.
- Want flexibility, depending on the product.
- Are happy accepting some uncertainty in exchange for potential savings.
Which Mortgage Is Better?
Neither option is automatically better than the other.
A fixed rate offers certainty, while a variable rate offers flexibility and the possibility of lower payments if interest rates fall.
The most suitable mortgage depends on factors such as:
- Your income.
- Your household budget.
- Your future plans.
- Your attitude to financial risk.
- The mortgage products available at the time you apply.
Can I Switch Later?
Yes.
When your current mortgage deal comes to an end, you may be able to remortgage onto another fixed or variable rate, depending on your circumstances and the products available.
It’s often worth reviewing your options several months before your existing deal expires.
How Can a Mortgage Broker Help?
Comparing mortgage rates isn’t simply about finding the lowest interest rate.
A mortgage broker will also consider:
- Product fees.
- Early repayment charges.
- Incentives such as cashback.
- Overall cost.
- Flexibility.
- Your future plans.
At HTG Mortgages, we’ll compare mortgages from a wide range of lenders and explain the advantages and disadvantages of each option, helping you make an informed decision.
Need Personal Mortgage Advice?
Every buyer’s situation is different. While this guide explains the general rules, the right mortgage for you depends on your income, deposit, credit history and future plans. If you’d like tailored advice, I’m here to help, with whole-of-market coverage.
