Fixed vs tracker mortgage: which is right for you?

With a fixed rate, your interest rate is set at the start and stays exactly the same for the length of the deal — typically two or five years, though ten-year fixes exist. Your monthly payment is identical every month for that whole period, which makes budgeting simple and protects you completely if interest rates rise.

The trade-off is flexibility. Fixed deals almost always carry an early repayment charge (ERC) if you want to leave, overpay beyond a set limit (often 10% a year), or move home without porting the mortgage. ERCs commonly run from 1% to 5% of the balance and usually taper down each year. On a £250,000 mortgage a 3% ERC is £7,500, so a fix is a commitment for the full term.

When your fix ends you roll onto the lender's standard variable rate (SVR), which is typically much higher, so you'll normally remortgage onto a new deal a few months before it expires.

A tracker charges the Bank of England base rate plus a fixed margin set by the lender. If the base rate is 3.75% and your margin is 0.75%, you pay 4.50%. That margin never changes, but the base rate does — the Bank's Monetary Policy Committee reviews it eight times a year, and trackers usually adjust within a month of any change.

This means your payment can go down as well as up. If the base rate is cut by 0.25%, your rate falls to 4.25% on the example above and your monthly payment drops. If it rises, your payment rises with it — there's no cap unless the product specifically has one (a 'collar' or 'cap').

Many trackers have low or no early repayment charges, which is the other big draw: you can often remortgage onto a fix at any point without penalty. Always check the specific product, though, as some trackers do apply an ERC.

There's no permanent winner — it depends on where rates go. In July 2026, with the base rate held at 3.75% since 18 June and markets expecting it to stay there for the rest of the year, fixed and tracker rates are fairly close. As a benchmark, the best first-time buyer two-year fixes sit around 4.67% at 90% loan-to-value (a 10% deposit) and near 4.4%–4.5% with a 15%–25% deposit; five-year fixes are broadly similar.

A tracker only beats a fix overall if the base rate falls far enough, fast enough, to offset the fact that trackers often start a little higher than the cheapest fixes. If the Bank cuts two or three times over your deal, a low-margin tracker with no exit penalty can work out cheaper — and you keep the freedom to switch to a fix if the outlook changes. If rates stay flat or rise, the certainty of a fix looks smart in hindsight.

Because nobody can reliably predict the base rate, the honest answer is to choose based on your own finances and how much payment uncertainty you can live with — not on a forecast.

Start with your budget. If a rate rise of one or two percentage points would genuinely stretch you, the certainty of a fixed rate is usually worth it — you'll always know exactly what leaves your account. Most first-time buyers are in this position, which is why the large majority pick a fix.

Consider a tracker if you have breathing room in your budget, you think rates are more likely to fall than rise, or you may want to move, overpay heavily, or remortgage soon and don't want to be tied in by an early repayment charge. A tracker's flexibility is most valuable when your plans are uncertain.

Whichever way you lean, a whole-of-market mortgage broker is worth using. They can compare fixed and tracker products across the market, factor in fees (not just the headline rate), and flag any that let you switch from tracker to fixed without penalty — a useful hedge. For first-time buyers, brokers are usually free, paid by the lender on completion.