August 29, 2026
Mortgage Basics
Fixed, Variable, and Tracker Mortgages Explained
A plain-English guide to fixed, variable and tracker mortgages: how each works, the 5 key differences, and what happens when Bank Rate changes.
Choosing between a fixed, variable or tracker mortgage comes down to one main trade-off: certainty against flexibility. A fixed rate keeps your payments the same for a set time, while variable and tracker rates can go up or down, usually following the Bank of England’s Bank Rate.
This guide explains how each mortgage rate type works, the 5 key differences between them, what happens when rates change, and the questions that may help you decide which suits your circumstances.
Key points
- A fixed rate stays the same for a set period, usually between 2 and 10 years.
- A tracker rate follows another rate, usually Bank Rate plus a set margin.
- A standard variable rate (SVR) is set by your lender and can change at any time.
- Fixed deals often have early repayment charges; trackers are often more flexible.
- When most deals end, your mortgage moves onto the lender’s SVR unless you switch.
3.75%Bank Rate, held on 17 September 2026
2 to 10years: the usual length of a fixed-rate deal
6 weeksroughly how often the Bank of England reviews Bank Rate
Fixed, variable or tracker mortgage: the types at a glance
Most UK mortgages fall into one of two families. With a fixed rate, your interest rate is locked for a set time. With a variable rate, it can change. Trackers, standard variable rates and discounted rates are all types of variable rate. The main difference between them is what makes the rate move.
| Rate type | What sets the rate | Can your payment change during the deal? |
|---|---|---|
| Fixed | Agreed at the start and locked | No |
| Tracker | Usually Bank Rate plus a set margin | Yes, when the tracked rate moves |
| Standard variable rate (SVR) | Your lender, at any time | Yes |
| Discounted | A set discount off the lender’s SVR | Yes, when the SVR moves |
How a fixed-rate mortgage works
With a fixed-rate mortgage, your interest rate stays the same for an agreed period. MoneyHelper says fixed periods are usually between 2 and 10 years. Your monthly payment doesn’t change during that time, even if Bank Rate rises or falls.
Possible upsides
- Your payments stay the same, which can make budgeting easier
- You’re protected if rates rise during the fixed period
- Many fixed deals let you overpay up to 10% a year without a fee
Things to weigh up
- Fixed rates are often a little higher than variable rates at the start
- You won’t benefit if rates fall
- Leaving early can mean an early repayment charge
2, 5 or 10 years: choosing a fixed-rate length
If you choose a fixed rate, you’ll also choose how long to fix for. Shorter and longer fixes each have trade-offs:
- A shorter fix (such as 2 years) means you’ll be choosing a new deal again sooner. That gives you more chances to switch if rates fall, but also less protection if they rise.
- A longer fix (such as 5 or 10 years) gives you payment certainty for longer. But early repayment charges usually apply for the whole fixed period, so it may be less flexible if you move home, want to repay a lump sum or need to change your mortgage.
There’s no length that’s right for everyone. It may help to think about your plans for the next few years, such as moving, starting a family, a change of job or retirement, and how long you’d value fixed payments for.
When a fixed deal ends, your mortgage usually moves onto the lender’s SVR unless you switch to a new deal. Our guide to when to remortgage explains the timing, and our guide to what happens when your fixed rate ends sets out your options.
How a tracker mortgage works
A tracker mortgage follows another interest rate, usually the Bank of England’s Bank Rate plus a set margin. If Bank Rate goes up or down, your rate moves by the same amount. MoneyHelper notes that trackers usually last two to five years, although some run for the whole mortgage term.
Illustrative example
A tracker at Bank Rate + 1%. With Bank Rate at 3.75%, your rate would be 3.75% + 1% = 4.75%.
On a £200,000 repayment mortgage over 25 years, that’s about £1,140.23 a month.
If Bank Rate rose by 0.25%, your rate would become 5.00% and your payment about £1,169.18, so around £28.95 a month more.
The margin is an example only, not a current market rate. Payments are worked out with the standard repayment formula.
Trackers are often more flexible than fixed deals. MoneyHelper says you’re usually not tied in, and some trackers let you switch early without a fee, but it’s always worth checking with your lender. It also suggests checking that your lender can’t raise your rate when the rate it’s linked to hasn’t changed.
How a standard variable rate (SVR) works
A standard variable rate is the lender’s own default rate. According to MoneyHelper, it can change at any time, and it usually follows Bank Rate movements, although the lender decides. Your lender should write to you to explain any new rate, and a change could reach your payments as soon as your next monthly payment.
SVRs are usually higher than the deals lenders offer, but there are usually no penalties for leaving one, and overpayments are often unlimited.
Watch out
Most fixed, tracker and discounted deals move onto the lender’s SVR when they end. If you don’t arrange a new deal in time, your payments could go up. Our free fixed-rate reminder emails you 6, 3 and 1 month before your deal ends.
Tracker or SVR: what’s the difference?
Both are variable, so it’s easy to mix them up. The key difference is who controls the rate. A tracker is linked to an outside rate, usually Bank Rate, so it moves only when that rate moves, by the same amount. An SVR is set by your lender, which can change it at any time, even if Bank Rate hasn’t moved.
Trackers are usually taken out as a deal for a set period, while the SVR is where most mortgages go when a deal ends.
How a discounted-rate mortgage works
A discounted-rate mortgage gives you a set discount off the lender’s SVR for a limited time, typically two or three years. If the lender changes its SVR, your rate changes too, so your payments can go up or down.
MoneyHelper points out that a bigger discount doesn’t always mean a lower rate, because lenders’ SVRs differ. A smaller discount from a lender with a lower SVR could work out cheaper.
5 key differences between fixed, tracker and variable rates
1. Payment certainty
A fixed rate gives you the same payment for the whole deal. With trackers, SVRs and discounted rates, your payment can change, which MoneyHelper notes can make budgeting harder.
2. What moves your rate
A tracker moves with the rate it follows, usually Bank Rate. An SVR or discounted rate moves when your lender decides. A fixed rate doesn’t move during the deal.
3. Early repayment charges
Fixed deals often have early repayment charges if you leave during the fixed period. Trackers are more often free to leave, and SVRs usually have no exit penalty. Always check the terms of a specific deal.
4. Overpayments
Many fixed deals let you overpay up to 10% a year without a charge. On an SVR, overpayments are often unlimited. Our overpayment calculator shows what overpaying could save.
5. The starting rate
Fixed rates are often a little higher at the start than variable rates, in exchange for the certainty. Over the deal, which works out cheaper depends on what happens to rates, which nobody can know in advance.
What happens to your mortgage when Bank Rate changes?
The Bank of England’s Monetary Policy Committee reviews Bank Rate about every six weeks. Bank Rate was held at 3.75% on 17 September 2026, and the next announcement is due on 5 November 2026.
| If Bank Rate rises | What usually happens |
|---|---|
| Fixed rate | No change until the deal ends |
| Tracker | Rate rises by the same amount |
| SVR | Often rises, at the lender’s choice |
| Discounted | Rises if the lender raises its SVR |
The same works in reverse when Bank Rate falls: tracker payments usually fall, and SVRs may fall, while fixed payments stay the same. To see how a different rate could change your payment, try our calculator.
£New payment calculatorSee how your monthly payment could change at a different rateTry it →
Other mortgage features you may come across
Rate type isn’t the only choice. Some mortgages add extra features on top, which can work with a fixed or variable rate depending on the lender.
Offset mortgages link your mortgage to a savings account. MoneyHelper explains that you only pay interest on your mortgage balance minus your savings, which may help you pay it off sooner while you can still get to your savings. The trade-off is that you won’t earn interest on those savings, and there may be fewer discounted deals to choose from.
Portable mortgages let you take your current deal with you if you move home, subject to the lender’s checks. This can be useful if you’re on a fixed rate with early repayment charges and you need to move during the deal.
What happens when your deal ends?
Whichever rate type you choose, most deals last a set period. When yours ends, you’ll usually have three options:
- Do nothing and move onto your lender’s SVR, which is usually higher.
- Take a new deal with your current lender, known as a product transfer.
- Remortgage to a new lender, which usually involves affordability and credit checks.
It’s also a chance to look again at your rate type. Your circumstances or plans may have changed since you first chose, so a type that suited you then may not be the one that suits you now.
Good to know
Fixed, tracker and variable rates work the same way across England, Scotland, Wales and Northern Ireland. The rate types and features on offer depend on the lender, not on where in the UK you live.
Which mortgage rate type is cheapest?
There’s no single answer. A variable rate may start lower, but it could rise. A fixed rate may cost a little more at the start, but it protects you if rates go up. Fees matter too: a low rate with a large arrangement fee can cost more overall than a slightly higher rate with no fee.
MoneyHelper suggests comparing deals using the APRC (Annual Percentage Rate of Charge), which includes fees as well as the interest rate, so you can compare the overall cost on a like-for-like basis.
Can you switch mortgage type mid-deal?
Usually you can, but it may cost you. x a tracker or an SVR is often cheaper or free, but check your own terms first. If you’re thinking of moving home soon, MoneyHelper suggests considering deals with low or no early repayment charges.
5 questions that may help you choose
Which type suits you depends on your circumstances. These questions may help you think it through:
- How tight is your budget? If a rise in payments would be hard to manage, the certainty of a fixed rate may be worth considering.
- How long do you plan to stay? If you might move or repay soon, early repayment charges on a fixed deal could matter more.
- Do you want to overpay? Check each deal’s overpayment allowance, especially if you expect a bonus or lump sum.
- How would you feel if rates rose? Some people value peace of mind over the chance of a lower rate.
- What’s the total cost? Compare the APRC and fees, not just the headline rate.
Whether you choose a repayment or interest-only mortgage is a separate decision from the rate type. An FCA-authorised mortgage adviser can compare options for your circumstances if you’d like a personal recommendation.
£Mortgage repayment calculatorCompare monthly payments at different rates and termsTry it →
Summary
A fixed rate offers certainty, a tracker follows Bank Rate, and an SVR or discounted rate moves when your lender decides. Each has trade-offs around payment certainty, early repayment charges and overpayments, and which suits you depends on your budget, plans and how you feel about rates changing.
Frequently asked questions
What is the difference between fixed and variable?
A fixed-rate mortgage keeps the same interest rate, and so the same monthly payment, for a set period, usually 2 to 10 years. A variable-rate mortgage can change during the deal. Trackers move with another rate, usually Bank Rate, while standard variable and discounted rates move when the lender decides.
How does a tracker mortgage work?
A tracker mortgage follows another interest rate, usually the Bank of England’s Bank Rate, plus a set margin. If Bank Rate rises by 0.25%, your rate rises by 0.25% too, and if it falls, your rate falls. Trackers often run for two to five years, and some last the whole term.
Which mortgage type is cheapest?
No mortgage type is always cheapest. Variable rates may start lower but can rise, while fixed rates can cost a little more at first but protect you from rises. Fees also affect the total cost, so comparing deals using the APRC, which includes fees, gives a fairer like-for-like comparison.
Can I switch types mid-deal?
You can usually switch mortgage type during a deal, but it may cost you. Leaving a fixed rate early often means an early repayment charge. Leaving a tracker or standard variable rate is often cheaper or free. It’s worth checking your mortgage terms before making any change.
Which type suits a tight budget?
A fixed rate is often considered by people on a tight budget, because the payment stays the same for the deal and won’t rise if Bank Rate goes up. The trade-off is that you won’t benefit if rates fall, and leaving early can mean a charge. Your circumstances will decide what suits you.
Sources
- MoneyHelper – Understanding mortgages and interest rates
- MoneyHelper – How will interest rates affect my mortgage?
- Bank of England – Interest rates and Bank Rate: our latest decision
Last updated: 28 October 2026. This guide is general educational information only and is not regulated financial advice.
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Mortgage Owl provides general educational information only, not regulated financial advice.
About the author: Steve
Steve is the founder of Mortgage Owl and is training to become a mortgage adviser. He’s currently studying Module 1 of 3 of CeMAP, the Certificate in Mortgage Advice and Practice.
He originally studied business, finance and accountancy, then spent 30 years in policing and the merchant navy before returning to his first passion: helping people make sense of money.
He writes every Mortgage Owl guide in plain English, so you can feel informed before you speak to an adviser.
Qualifications: Registered student with the London Institute of Banking & Finance (LIBF), studying for CeMAP.
He originally studied business, finance and accountancy, then spent 30 years in policing and the merchant navy before returning to his first passion: helping people make sense of money.
He writes every Mortgage Owl guide in plain English, so you can feel informed before you speak to an adviser.
Qualifications: Registered student with the London Institute of Banking & Finance (LIBF), studying for CeMAP.
