Fixed or Tracker Explained
Choosing the right type of interest rate is one of the biggest decisions when getting a mortgage. Let's break down the differences.
Speak to an AdvisorFixed-Rate Mortgages
With a fixed-rate mortgage, your interest rate is locked in for a set period - usually 2, 3, 5, or 10 years. Regardless of what happens to the Bank of England base rate or the wider economy, your monthly payments will remain exactly the same until the fixed period ends.
The Benefits
- • Certainty: You know exactly what you will pay every month, making budgeting easy.
- • Protection: If interest rates rise, your payments will not go up.
- • Peace of mind: Great for first-time buyers or families on tight budgets.
The Downsides
- • No savings if rates fall: If the Bank of England cuts rates, your mortgage won't get cheaper.
- • Early Repayment Charges (ERCs): You usually face hefty penalties if you want to leave the deal early or overpay by more than 10%.
Tracker Mortgages
A tracker mortgage is a type of variable rate mortgage. It "tracks" the Bank of England base rate, plus a set percentage. For example, if the base rate is 4% and your tracker is "Base Rate + 1%", you will pay 5%. If the base rate drops to 3.5%, your rate automatically drops to 4.5%.
The Benefits
- • Savings if rates drop: Your monthly payments will immediately go down if the base rate falls.
- • Flexibility: Many tracker mortgages do not have Early Repayment Charges, meaning you can leave the deal or overpay at any time without penalty.
The Downsides
- • Payment uncertainty: Your monthly payments can go up as well as down.
- • Risk: If the base rate rises significantly, your mortgage payments could become unaffordable.
Choosing Your Rate
We help you weigh up the market to find the right mortgage structure for your future.
Financial Review
We analyze your budget and risk appetite to see if you value payment certainty or potential savings.
Market Outlook
We provide insights on current interest rate trends to help you decide when to fix and for how long.
Comparison Illustration
We show you the side-by-side costs of fixed vs tracker deals over the next few years.
Locking It In
Once you've decided, we secure your chosen product and track it until completion.
Frequently Asked Questions
Still unsure which is best for you?
The right choice depends on your financial situation, your risk appetite, and current market conditions. Speak to one of our expert advisors to map out the best strategy.
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