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Fixed VS Variable Mortgage

Without a doubt, getting a mortgage will be one of your biggest financial commitments. Mix in the excitement of buying your home with the stress of finding the right mortgage deal, and the experience can become overwhelming! You will be faced with many options, choices and types, so it is crucial to understand what will suit you. One of the first major choices you will need to decide on, is either a fixed or variable rate mortgage. Read our guide to find out the pros and cons of various mortgage types.

Fixed Rate

A fixed rate mortgage is where the interest rate is guaranteed to stay the same throughout the length of a set period of time.


Your mortgage payments will not increase, no matter how high the rates go.

Peace of mind by knowing what your mortgage payments will cost and can help you to budget.


If interest rates fall, you will not benefit.

Deals are usually slightly higher than variable rate mortgages.

If you want to get out early, you’ll usually pay high penalties.

Variable Rate

Variable rate mortgages is when the interest rate can change at any time, and will move up and down with changes to the UK economy. Variable rate deals fall into three categories: trackers, standard variable rates (SVRs) and discounts.

  1. Tracker mortgages

Tracker mortgages are directly in line with and tracks another interest rate – normally the Bank of England’s official borrowing rate.


It’s transparent as you’ve the certainty that only economic change can move your rate, rather than the commercial considerations of the lender.

If the rate it is tracking decreases, your mortgage repayments will drop too.


If the rate it is tracking increases, so will your mortgage payments.

You might have to pay an early repayment charge if you want to switch before the deal ends.

  1. Standard variable mortgages

Standard variable rate mortgages tend to roughly follow Bank of England’s base rate, with a percentage of points above the base rate, and they can vary massively between lenders.


If interest rates decrease, your mortgage repayments will likely decrease too.

There is usually no early repayment charge, meaning the mortgage can be paid back in full at any point without penalty.


If interest rates rise, your mortgage repayments will almost certainly rise too, and can be changed at any time.

SVR mortgages are rarely available to new customers, and if they are, they are not as competitive as other incentive rates.

  1. Discount rate mortgages

Discount rate mortgages are a discount off the lenders standard variable rate and tend to last for a relatively short period – typically two or three years.


If interest rates decrease, your mortgage repayments will likely decrease too.

The rate starts off cheaper which will keep monthly repayments lower.

If the lender cuts its standard variable rate, you’ll pay less each month.


There is no guarantee your lender will move its standard variable rate down if the Bank of England base rate goes down.

The lender can raise its standard variable rate at any time, which will directly affect your rate.

If Bank of England base rates rise, you’ll probably see the discount rate increase too.


Which is best for you – a fixed or variable mortgage? Contact us for local and independent mortgage advice and we can help find the most suitable mortgage product for you.