Fixed vs tracker vs variable mortgage: which is best?

The short answer: a fixed rate keeps your payment the same for the deal period. A tracker follows the Bank of England base rate up and down. A standard variable rate (SVR) is the lender's default rate, which you fall onto when a deal ends, and is usually the most expensive. On £200,000 over 25 years, every 1% on the rate is roughly £125 a month.

The three main types

There are also discounted variable deals, a set amount below the lender's SVR, and offset mortgages, where savings reduce the interest. Both are less common.

What rate changes do to your payment

The payment on £200,000 over 25 years, starting from an example rate of 6%:

With a fix, only the middle row matters until the deal ends. With a tracker, any of these can happen during the deal.

Don't drift onto the SVR

When a fixed or tracker deal ends, most lenders move you to their SVR. At about 7.13%, that would cost roughly £142 a month more than a 6% deal on this loan, or about £1,699 a year. You can usually lock in a new deal up to six months before the old one ends, so set a reminder.

Choosing between them

• Fix if a payment rise would stretch your budget, you want to plan with certainty, or you think rates are more likely to rise.
• Consider a tracker if you could handle higher payments, think rates will fall, or might move or overpay heavily and want low or no exit fees.
• Fix length: longer fixes give more certainty and fewer remortgage fees; shorter fixes give flexibility. Make sure the early repayment charge period fits any plans to move.
• Look at the total cost, including arrangement fees. A lower rate with a £999 fee can cost more than a slightly higher rate with none on a small loan.

Lenders also stress test affordability at higher rates, whichever type you pick. See what mortgage lenders look at and what to do if mortgage rates rise.

Overpaying

Fixed deals usually allow overpayments of up to 10% of the balance a year without a charge. Trackers often allow more. See what overpaying £100 a month does and repayment vs interest-only.

Fees or rate: a worked example

Two 2-year fixes on £200,000 over 25 years:

Here the lower rate saves £556 in payments, so after the fee it is about £443 dearer. The bigger the loan, the more a lower rate is worth, so fee deals tend to win only on larger mortgages; the lower rate also pays off slightly more of the balance, which narrows the gap a little. Adding the fee to the loan means paying interest on it too.

Product transfer or remortgage?

• Product transfer: a new deal with your current lender. Usually quicker, with no legal work or valuation and often no affordability check.
• Remortgage: a new lender. It can find a better rate or let you borrow more, but takes longer and needs fresh checks.

Compare both before your deal ends. A broker can check the whole market, including your current lender's offer.

Offset mortgages

An offset mortgage links your savings to your mortgage. You pay interest only on the difference: with £200,000 borrowed and £20,000 in a linked account, you pay interest on £180,000. You earn no interest on the savings, but you save the mortgage rate instead, tax-free. Offset rates are usually a little higher, so they suit people who keep large balances, such as the self-employed saving for tax bills.

Rates are examples. The average fixed rate was close to 6% and the average SVR 7.13% in November 2026 (Moneyfacts). This is general information, not mortgage advice.