Fixed or Tracker Rate — How to Actually Choose

This is one of the most common questions we get. And it's usually framed as if there's a correct answer — as if one option is objectively better than the other.

There isn't. It depends entirely on your situation and your tolerance for uncertainty.

Let's go through it properly.

What a fixed rate actually means

A fixed rate mortgage locks your interest rate for a set period — typically 2, 5, or 10 years. Your monthly payment stays exactly the same throughout that period, regardless of what happens to interest rates in the wider market.

When that period ends, you move onto the lender's Standard Variable Rate (SVR), which is almost always higher. That's when you remortgage — either with the same lender or a different one.

What a tracker rate actually means

A tracker mortgage follows the Bank of England base rate, plus a fixed margin on top. So if the base rate is 4.75% and your tracker is "base rate + 0.9%", you pay 5.65%. If the base rate drops to 4.25%, you automatically pay 5.15% — no need to do anything.

The key word there is "automatically". Trackers move with the market. That's the whole point of them.

The case for fixing

Certainty. Simple as that.

If you're stretching yourself to afford the mortgage — as most people are — knowing exactly what you'll pay each month for the next 5 years is genuinely valuable. You can budget around it. You won't get a nasty surprise if rates tick up again.

It also tends to suit people who are just getting started and have other financial pressures: childcare, car finance, student loans. One less variable is one less source of stress.

The case for tracking

We're at a point where the Bank of England base rate has been coming down from its recent highs. If that trend continues — and many economists think it will, gradually — a tracker mortgage means your repayments fall automatically, without you having to remortgage each time.

The downside is obvious: if rates rise again, so do your payments. That's the gamble.

Trackers tend to suit people who have a bit more financial cushion, could absorb a higher payment if needed, and want to benefit if rates fall without being locked in.

What about discounted variable rates?

There's a third option that often gets overlooked: the discounted variable rate mortgage. This is different to a tracker — instead of following the Bank of England base rate, it follows the lender's own SVR at a discount.

The catch is that the lender can change their SVR whenever they like. Even if the base rate stays the same, your lender could technically increase their SVR (and they have before). Less predictable, lower starting rate. Worth considering in some circumstances, but usually not our first recommendation.

The length question

Two-year vs five-year fixed is often a trickier decision than fixed vs tracker.

A two-year fix gives you more flexibility — you're reviewing your options sooner and can take advantage of any rate improvements. But the rate is usually higher than a five-year, and you have remortgage costs every two years.

A five-year fix gives you longer certainty at (usually) a lower rate than the two-year equivalent. But you're locked in. If you need to sell or significantly change your mortgage mid-term, Early Repayment Charges can be painful.

Right now, the gap between two and five-year rates is fairly narrow. Five-year fixes are worth a serious look for most people.

The honest answer

Anyone who tells you with certainty which is better right now is either guessing or trying to sell you something. Rates move. Circumstances change. What we can do is model out both options for your specific numbers and show you exactly what you'd be paying under different base rate scenarios.

That takes about 20 minutes. It's part of what we do.