Choosing between a fixed and variable mortgage is one of the biggest financial decisions homeowners face. Here’s how to work out which is right for you.
Fixed vs Variable — Quick Comparison
| Feature | Fixed Rate | Standard Variable Rate (SVR) | Tracker |
|---|---|---|---|
| Rate changes? | No — locked in | Lender can change anytime | Follows Bank of England base rate |
| Typical rate | 4-5.5% | 7-8% | Base rate + 0.5-1.5% |
| Budget certainty | High | Low | Medium |
| Early repayment charges | Yes (during fix) | Usually none | Sometimes |
| Flexibility | Low | High | Medium |
| Best for | Certainty seekers | Short-term flexibility | Rate-fall bets |
When to Fix Your Mortgage
Fixing makes sense when:
- You need payment certainty — monthly budget can’t absorb increases
- Rates are low relative to history — locking in protects against rises
- You plan to stay put — not moving within the fix period
- You’re stretching your budget — any rate increase would cause stress
- The economy is uncertain — inflation or rate rises seem likely
The Case for a 2-Year Fix
| Advantage | Detail |
|---|---|
| Lower rate | Typically 0.2-0.5% cheaper than 5-year |
| Review sooner | Can switch if rates drop |
| Less commitment | Good if you might move |
| Market timing | Benefit from any future rate falls sooner |
The Case for a 5-Year Fix
| Advantage | Detail |
|---|---|
| Longer certainty | No rate worries for 5 years |
| Fewer fees | Only one arrangement fee vs two or three |
| Less hassle | No remortgage for 5 years |
| Peace of mind | Protected through economic ups and downs |
When to Stay on a Variable Rate
A variable rate might suit you if:
- You’re about to move — no early repayment charges to worry about
- You expect rates to fall — and want to benefit immediately
- You want to overpay significantly — many fixed deals cap overpayments at 10%
- You’re on a competitive tracker — some old tracker deals are excellent
- You need flexibility — might sell, port, or make large overpayments
The SVR Trap
Most homeowners should never stay on their lender’s SVR longer than necessary:
| Scenario | Fixed rate (4.5%) | SVR (7.5%) | Monthly difference |
|---|---|---|---|
| £200,000 mortgage, 25 years | £1,111 | £1,478 | £367 more |
| £300,000 mortgage, 25 years | £1,667 | £2,217 | £550 more |
| £150,000 mortgage, 20 years | £949 | £1,209 | £260 more |
Over a full year, that’s £3,120 to £6,600 wasted on an SVR when you could fix.
How to Decide — Step by Step
Step 1 — Check Your Risk Tolerance
Ask yourself: if your monthly payment jumped by £200-300, could you handle it?
- No → Fix your mortgage
- Yes, comfortably → Variable could work
Step 2 — Check the Rate Outlook
| Indicator | Suggests |
|---|---|
| Bank of England raising rates | Fix to protect yourself |
| Rates expected to fall | Variable or short fix |
| Inflation above target | Rates likely to rise — consider fixing |
| Economic slowdown | Rates may fall — short fix or tracker |
Step 3 — Check Your Plans
| Your situation | Best option |
|---|---|
| Staying 5+ years | 5-year fix |
| Might move in 2-3 years | 2-year fix (check portability) |
| Moving within 12 months | Stay on SVR / tracker |
| Want to make large overpayments | Variable or fix with generous overpayment terms |
Step 4 — Calculate the Break-Even
Compare total costs over the period, including:
- Monthly payments
- Arrangement fees (often £500-£1,500)
- Valuation and legal fees (sometimes free on remortgage)
- Early repayment charges if you might leave early
Current Market Context (2026)
| Factor | Detail |
|---|---|
| Bank of England base rate | 4.5% (as of early 2026) |
| Average 2-year fix | Around 4.5-5% |
| Average 5-year fix | Around 4.3-4.8% |
| Average SVR | 7-8% |
| Market expectation | Gradual rate reductions expected |
Common Mistakes to Avoid
- Staying on SVR by accident — always set a reminder for when your fix ends
- Only looking at the rate — total cost includes fees too
- Fixing too long when you’ll move — early repayment charges can cost thousands
- Ignoring overpayment limits — 10% per year is standard on fixed deals
- Not starting early enough — begin searching 3-6 months before your deal ends
Related Guides
- Mortgage Types UK 2026 — Fixed, Tracker, Offset, Interest-Only Explained
- Remortgaging Guide — complete process walkthrough
- How Much Can I Borrow? — mortgage affordability
- Mortgage Types Explained — all mortgage options compared