A fixed rate mortgage keeps your monthly payment exactly the same for a set period, no matter what happens to interest rates. For most people that certainty is worth having. The harder question is how long to fix for, and whether a tracker makes more sense right now.
For most borrowers, yes. A fixed rate removes the risk of your payment rising if interest rates go up. The main decisions are how long to fix for (2 years is more flexible, 5 years gives longer certainty) and whether the rate is competitive enough to be worth locking in now versus taking a tracker. A broker can run the comparison for your specific numbers.
With a fixed rate mortgage, your interest rate is set at the start and stays exactly the same for the length of the deal, whether that is two, three, five or sometimes ten years. It does not matter if the Bank of England raises rates six times or cuts them back to near zero. Your payment does not change.
At the end of the fixed period your mortgage moves to your lender's standard variable rate (SVR), which is usually significantly higher. That is the point at which most people remortgage onto a new deal.
Most lenders' SVRs sit 2 to 4 percentage points above the typical fixed rates on offer. Ending up on the SVR because you missed your remortgage window is one of the most common and avoidable ways to overpay on a mortgage. Starting to look at your options four to six months before your fix ends prevents this.
No mortgage type is right for everyone. Here is an honest look at what you get and what you give up.
| Pros | Cons |
|---|---|
| Payment certainty. Your monthly payment is the same throughout the fix. Easy to budget around. | You do not benefit if rates fall. If the base rate drops during your fix, your payment stays the same while tracker borrowers pay less. |
| Protection from rate rises. If base rate increases during your fix, your payment is unaffected. | Early repayment charges. Leaving the deal early usually triggers a charge, typically 1% to 5% of the outstanding balance. |
| Easier financial planning. Knowing exactly what you will pay for the next two or five years simplifies everything from budgeting to remortgage timing. | Less flexibility. Life changes like selling, upsizing or paying off a lump sum can be expensive mid-fix depending on the ERC structure. |
| Widely available. Fixed rates are offered by the vast majority of lenders across the whole market. | Rates can look less attractive in a falling rate environment. If you fix at a high point and rates drop, you may feel like you locked in at the wrong time. |
This is the question most people find harder than whether to fix at all. The most common options are 2 years and 5 years, with 3-year and 10-year deals also available from some lenders.
| 2-year fix | 5-year fix | |
|---|---|---|
| Payment certainty | 2 years | 5 years |
| Flexibility to remortgage | Sooner | Longer wait |
| ERC exposure period | Shorter | Longer |
| Rate | Usually lower in a normal rate environment | Usually slightly higher for the extra certainty |
| Best for | Flexibility, expecting rates to fall, may move soon | Long-term certainty, staying put, hate remortgage admin |
The right answer depends on what you think will happen to rates and what your plans are for the property. If you expect to sell or significantly overpay within three years, a 2-year fix gives you more room. If you want to set and forget for half a decade, a 5-year fix removes the need to remortgage in the middle of that period.
The best fix length is the one that matches your plans, not the one with the lowest headline rate on the day you apply.
One thing worth knowing: most fixed rate products allow overpayments of up to 10% of the outstanding balance per year without triggering an early repayment charge. If you plan to overpay more than that, check the specific terms before committing.
A tracker mortgage follows the Bank of England base rate, so your payment moves up and down with it. Neither type is always better. It depends on where rates are and where they are heading.
| Fixed rate | Tracker | |
|---|---|---|
| Payment stability | Guaranteed | Changes with base rate |
| If base rate rises | Unaffected | Payment increases |
| If base rate falls | No benefit | Payment decreases |
| Early repayment charges | Usually yes | Often none |
| Best environment | Rising or uncertain rates | Falling rate environment |
Trackers are most attractive when rates are expected to fall and you want to benefit without being locked in. Some tracker products have no early repayment charges at all, which makes them useful if you think you might need to switch or sell during the deal period.
Economists, banks and mortgage brokers all form views on where interest rates are heading, and they are frequently wrong. The decision between fixed and tracker is as much about your personal appetite for risk and your need for payment certainty as it is about rate forecasts. Most borrowers choose a fixed rate precisely because they do not want to have to worry about it.
When the fixed period ends your mortgage automatically moves to your lender's standard variable rate. This is almost always significantly more expensive than the deal you were on. Most lenders will write to you a few months before this happens, but that does not mean you should wait for the letter.
You can usually lock in a new rate up to six months before your current deal ends, and the new deal does not start until the old one finishes. Starting early means you are not rushed, you can compare options properly, and if rates drop before your completion date you can often reassess.
You can remortgage to a new deal with your existing lender (a product transfer, no legal work needed) or switch to a new lender for potentially better rates. A whole-of-market broker can compare both options and tell you which is worth the extra steps before you commit to either.
Call 01422 354011 or use the form below. Woodhall Mortgages compares fixed and tracker options across the whole market and can tell you which term makes most sense for your circumstances before you commit to anything.
Get Mortgage AdviceWoodhall Mortgages searches the whole market for the right fixed rate deal for your circumstances, including broker-only products not available directly. Whether you are buying, moving or remortgaging, we compare your options and advise on which term makes most sense before you commit.
Initial discussion free. A broker fee of £299 is payable if you choose to proceed following a formal mortgage offer. This fee is non-refundable once charged. We may also receive commission from the lender. Your home may be repossessed if you do not keep up repayments on your mortgage.
Get Mortgage AdviceWoodhall Mortgages is authorised and regulated by the Financial Conduct Authority (FRN 762513). As a whole-of-market mortgage broker, we consider mortgages from across the market, subject to lender criteria and product availability. This article is for general information only and does not constitute regulated mortgage advice. Mortgage rates and products change frequently. Your home may be repossessed if you do not keep up repayments on your mortgage.
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