Mortgage rates explained: fixed, tracker and the cost of waiting
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Quick answer: A mortgage rate is the interest your lender charges. Most UK borrowers choose a fixed rate for certainty, while trackers follow the Bank of England base rate. Your loan-to-value band is the biggest factor in the rate you are offered.
The rate on your mortgage is the single biggest cost of buying a home. This guide explains the main rate types, how the Bank of England base rate feeds through, and why your deposit size moves the rate you can get.
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Read the full mortgages & first homes guide →Primary source: www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
Fixed, tracker and SVR
A fixed rate keeps your interest rate and monthly payment the same for the deal period, giving certainty. A tracker follows the base rate plus a set margin, so it falls when the base rate falls and rises when it rises. A standard variable rate is the lender's default rate after your deal ends — almost always worth avoiding by remortgaging.
Most borrowers fix for two or five years. A longer fix gives more certainty but less flexibility; a shorter fix lets you re-shop sooner but more often.
Why your deposit changes the rate
Lenders price by loan-to-value (LTV) — the loan as a percentage of the property value. The smaller the loan relative to the home, the lower the risk, and the cheaper the rate. Pushing your deposit just past a threshold (for example from 90% to 85% LTV) can noticeably cut your rate.
Compare the true cost including any product fee (often £999–£1,495), not just the headline rate. A slightly higher rate with no fee can be cheaper on a smaller loan.
Common questions
Should I fix for 2 or 5 years?
A 5-year fix gives longer certainty and no remortgage costs in between; a 2-year fix lets you grab a better rate sooner if rates fall. The right choice depends on your plans and appetite for risk.
Can I leave a fixed rate early?
Usually only by paying an early repayment charge, which can be a few percent of the balance. Always check the ERC before fixing for a long period.