Which Type Is Right for You?
Choosing between a fixed-rate and variable-rate mortgage is one of the most important decisions you’ll make when arranging your home loan. Each option has different advantages, risks and long-term implications for monthly payments, stability and flexibility.
This guide breaks down how fixed and variable rates work, who they suit, how lenders price them, and what to consider before choosing a mortgage deal. We also compare both types side by side so you can make a confident decision.
What Is a Fixed-Rate Mortgage?
A fixed-rate mortgage locks in your interest rate for a set period, typically 2, 3, 5, 7 or 10 years. During this time, your monthly payments will remain the same regardless of changes in the wider market.
Key features:
- Rate stays the same throughout the fixed term
- Consistent monthly payments
- Protection against interest rate rises
- Early repayment charges usually apply if you switch or repay early
Fixed rates are especially popular with first-time buyers and anyone who values financial certainty.
What Is a Variable-Rate Mortgage?
Variable-rate mortgages have interest rates that can change over time, depending on market conditions or the lender’s pricing decisions.
There are three main types of variable rate:
- Tracker mortgages – linked directly to the Bank of England base rate
- Discounted variable mortgages – a discount from the lender’s Standard Variable Rate (SVR)
- Standard Variable Rate (SVR) – set by the lender, can rise or fall at any time
Variable mortgages offer flexibility but come with uncertainty around future payments.
Fixed vs Variable: What’s the Difference?
| Feature | Fixed-Rate | Variable-Rate |
| Monthly Payments | Stay the same | Can increase or decrease |
| Risk Level | Low | Medium to high |
| Flexibility | Less flexible | More flexible |
| Early Repayment Charges (ERCs) | Usually apply | Often limited or none |
| Best For | Budget certainty | Flexibility & potential savings |
Pros & Cons of Fixed-Rate Mortgages
Pros:
- Payments stay the same every month
- Protection from rising interest rates
- Easier budgeting
- Peace of mind during economic uncertainty
Cons:
- Early repayment charges apply if you switch mid-term
- Fixed rates may be higher than variable rates initially
- Limited flexibility
Pros & Cons of Variable-Rate Mortgages
Pros:
- Potential for lower initial rates
- Greater flexibility with fewer penalties
- Can repay early more easily on many products
Cons:
- Payments can increase
- Harder to budget long-term
- SVR changes are unpredictable
When a Fixed Rate Might Be Best
A fixed rate may suit you if you:
- Prefer predictable monthly payments
- Expect interest rates to rise
- Are on a tight budget
- Are a first-time buyer
When a Variable Rate Might Be Best
A variable rate may suit you if you:
- Want flexibility to switch or repay early
- Expect rates to fall
- Are comfortable with payment changes
- Are planning to remortgage or move soon
How Lenders Price Fixed & Variable Rates
Fixed-rate pricing is based heavily on longer-term market forecasts and swap rates. Variable and tracker mortgages are influenced directly by the Bank of England base rate.
For more detail on affordability and how lenders set limits, see the guide: How Much Can I Borrow?
Fixed vs Variable for Remortgages
If your current deal is ending, you may be choosing between a fixed or variable rate for your remortgage. Consider:
- When your fixed term ends (avoid SVR)
- Whether you plan to move soon
- Whether you want stability or flexibility
For full timelines, see: Remortgage Timeline Guide
Impact on Loan-to-Value (LTV)
Fixed or variable doesn’t change LTV directly, but a lower LTV can unlock cheaper fixed rates.
Full breakdown here: LTV Explained
Next Steps
If you’re deciding between fixed and variable rates or want clarity on which suits your income, risk level and monthly budget, we can connect you with FCA-regulated advisers who can compare available products and run tailored affordability checks.
You can also explore related guides such as our Borrowing Guide or check deposit rules in the Deposit Guide.
All mortgage advice is provided by FCA-regulated advisers. Your home may be repossessed if you do not keep up repayments on your mortgage.
FAQs
Are fixed or variable mortgages cheaper?
Variable rates are often cheaper initially but carry risk. Fixed rates offer stability and predictable payments.
Can I switch from fixed to variable?
Yes, but ERCs may apply until your fixed term ends.
Do variable rates always follow the base rate?
Tracker mortgages do. Other variable products may change at the lender’s discretion.
Can I fix my mortgage for 10 years?
Yes — 10-year fixed rates exist and offer long-term stability but may have higher ERCs.
Which is better for first-time buyers?
Most first-time buyers choose fixed rates for stability, but both can work depending on your situation.