Fixed vs tracker mortgage: which should you choose?

5 min read · June 2026

The fixed vs tracker debate is usually framed as a bet on interest rates: do you think rates will go up or down? But that framing misses the point. Most people are not in a position to predict rate movements — and the real question is how you'd handle it if the other thing happened.

Fixed rate mortgages

With a fixed rate, your interest rate — and therefore your monthly payment — stays the same for the agreed term, regardless of what happens to the Bank of England base rate or the wider mortgage market.

Common fixed terms are 2 years, 5 years, and increasingly 10 years. At the end of the fixed term, you roll onto the lender's Standard Variable Rate unless you remortgage — which you should do. (See our guide on what happens when your fixed rate ends.)

The main benefit: certainty. You know exactly what you'll pay every month. You can budget around it with confidence.

The main cost: Early Repayment Charges (ERCs). If you want to leave the mortgage before the fixed term ends — because you're moving house, overpaying above your allowance, or simply switching to a better deal — you'll pay a penalty. ERCs are typically 1–5% of the outstanding mortgage, reducing each year of the term.

Tracker mortgages

A tracker mortgage sets your interest rate at a defined margin above (or occasionally at) the Bank of England base rate. If the base rate rises, your payment rises. If the base rate falls, your payment falls — usually promptly, unlike SVRs which tend to trail behind on the way down.

Most trackers have a term of 2 years, though lifetime trackers exist. Most trackers do not have early repayment charges, which gives you genuine flexibility to overpay or switch without penalty.

The main benefit: if rates fall, you benefit automatically. And no ERCs means more freedom to move or switch.

The main risk: if rates rise, your payment rises with them — sometimes significantly. On a £250,000 mortgage, a 1% base rate increase adds roughly £130/month. That might be fine; it might not.

How to decide

A few honest questions:

• If your payment went up by £200/month tomorrow, could you manage it without real stress? If yes, a tracker might suit you. If the honest answer is no, fix.
• Are you planning to move within two to three years? A tracker's lack of ERCs makes it much more flexible if you might sell before a fixed term ends.
• Do you have significant other financial pressures (childcare, car finance, variable income)? More variables in life = more reason to fix the mortgage and remove one source of uncertainty.

The question isn't which one is "better" — it's which one fits your life right now.