Fixed-rate vs tracker mortgage — which UK mortgage type fits you?
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In short. A fixed-rate mortgage locks your interest rate for a set period — usually 2, 5 or 10 years. A tracker mortgage moves up and down with the Bank of England Bank Rate plus a set margin.
Both are 'deal' periods on the same underlying mortgage. When the deal ends, you typically move onto the lender's standard variable rate (SVR) unless you remortgage. The choice is mostly about how much rate certainty matters to you, and where you think Bank Rate is heading.
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Side by side
Monthly payment
Fixed-rate mortgage
Fixed for the deal period
Tracker mortgage
Changes when Bank Rate moves
Typical deal length
Fixed-rate mortgage
2, 3, 5 or 10 years
Tracker mortgage
2 or 5 years (some lifetime trackers)
Reacts to a Bank Rate cut
Fixed-rate mortgage
No — payment unchanged
Tracker mortgage
Yes — payment falls
Reacts to a Bank Rate rise
Fixed-rate mortgage
No — payment unchanged
Tracker mortgage
Yes — payment rises
Early repayment charge
Fixed-rate mortgage
Usually 1–5% of balance during deal period
Tracker mortgage
Often nil, or low
Budgeting certainty
Fixed-rate mortgage
High
Tracker mortgage
Low
Switch to a fix later
Fixed-rate mortgage
Pay ERC if you leave early
Tracker mortgage
Often penalty-free
When Fixed-rate mortgage usually wins
- You value predictable monthly payments
- You think rates may rise during your deal
- You're at the edge of what you can afford and need certainty
When Tracker mortgage usually wins
- You think Bank Rate is more likely to fall than rise
- You may want to overpay heavily or repay early
- You can absorb a higher payment if rates rise
Related quick answers
FAQ
- Are tracker mortgages always cheaper than fixed rates?
- No. Tracker rates can be lower or higher than fixed rates at any given time depending on market expectations of where Bank Rate is heading. The headline rate alone is not the full picture — early repayment charges and fees also matter.
- What is a collar on a tracker mortgage?
- A floor below which your tracker rate cannot fall, even if Bank Rate keeps dropping. Check the loan offer for any collar or cap.
- What is a discounted variable mortgage?
- A separate product where the lender offers a discount off its standard variable rate. It is not the same as a tracker — the lender can change the SVR at any time.