Fixed vs Variable Rate Mortgages: How to Choose the Best Option for You
Choosing between a fixed or variable rate mortgage is one of the most important financial decisions you’ll make when buying or remortgaging a home. Each option affects how much you’ll pay each month — and how predictable your payments will be in the years ahead.
Let’s break down how they work, their pros and cons, and how to decide which one fits your situation best.
What Is a Fixed Rate Mortgage?
A fixed rate mortgage means your interest rate — and therefore your monthly repayments — stay exactly the same for a set period, usually 2, 3, 5, or even 10 years.
Quick answer:
A fixed rate mortgage gives you payment stability and certainty, making it easier to budget each month.
During your fixed period, even if interest rates in the wider market rise or fall, your payments stay the same. Once the deal ends, your mortgage usually moves to your lender’s standard variable rate (SVR), which is often higher — that’s when many people choose to remortgage.
Pros of fixed rate mortgages
- Predictable payments: You know exactly what you’ll pay each month.
- Budget stability: Ideal if you’re managing a tight budget or prefer certainty.
- Protection from rate rises: Your payments won’t increase if interest rates go up.
Cons of fixed rate mortgages
- No benefit from rate drops: If rates fall, you won’t pay less.
- Early repayment charges: You may face fees if you want to switch or repay early.
- Higher initial rates: Fixed rates are often slightly higher than variable ones at the start.
What Is a Variable Rate Mortgage?
A variable rate mortgage means your payments can go up or down depending on changes to your lender’s rate or the central base rate.
There are a few types — standard variable rate (SVR), tracker, and discount mortgages — but they all share one key feature: your monthly payments aren’t fixed.
Quick answer:
A variable mortgage offers flexibility and potential savings when rates fall — but your payments can rise too.
Pros of variable rate mortgages
- Potential savings: You might pay less if rates fall.
- Flexibility: Many variable deals have fewer penalties if you want to overpay or switch.
- Short-term opportunities: Good for those expecting to move or remortgage soon.
Cons of variable rate mortgages
- Unpredictable payments: Your monthly costs can rise suddenly.
- Budget uncertainty: Harder to plan long-term spending.
- Financial risk: Less protection if rates climb significantly.
Fixed vs Variable: Which Is Cheaper?
It depends on timing and market conditions. When rates are rising, fixed deals often work out cheaper in the long run because they shield you from future increases. When rates are steady or falling, variable deals can save money — but only if you’re comfortable with potential swings.
We’ve seen clients save thousands by fixing just before a rate rise, but others have benefited from staying variable when rates dropped. The key is matching the deal to your risk tolerance and life plans.
How Long Should You Fix Your Mortgage For?
Most people choose between 2 and 5 years, but it depends on your goals:
- 2-year fix: Often lower rates and flexibility if your situation may change soon.
- 5-year fix: Greater peace of mind for longer-term stability.
- 10-year fix: Suited to those who plan to stay put and want long-term certainty.
If you’re not sure which to choose, we can help you weigh up the costs, flexibility, and likely rate trends before committing.
When Could a Variable Rate Mortgage Make Sense?
A variable rate mortgage might suit you if:
- You expect rates to fall soon.
- You want freedom to make extra payments or switch lenders without large fees.
- You’re planning to move or sell your property within a few years.
Some clients choose a variable deal during transitional periods — for example, while waiting for a promotion, finishing renovations, or preparing to sell — because it avoids being locked in.
How Do Lenders Decide What Rate You Get?
Whether fixed or variable, lenders look at the same affordability factors:
- Your income and outgoings
- Your credit score
- Your deposit size or available equity
- Employment or self-employment stability
A strong deposit or clean credit record often helps you access lower interest rates on both fixed and variable options.
We cover this in more detail in our guide on what lenders look for on bank statements.
Should First-Time Buyers Choose Fixed or Variable?
For many first-time buyers, fixed rate mortgages provide valuable predictability during the first few years of homeownership. Knowing exactly what you’ll pay each month helps with budgeting and reduces stress.
However, if you’re financially flexible and comfortable with change, a variable rate mortgage could offer savings — especially if you can absorb a short-term increase in payments.
We talk more about this in our first-time buyer guide, including tips for budgeting and preparing documents.
What Happens When a Fixed Deal Ends?
When your fixed period finishes, your mortgage usually moves onto your lender’s standard variable rate (SVR), which is typically higher.
You have three main options:
- Remortgage to a new fixed deal (most common).
- Switch to another lender offering a better rate.
- Stay on the SVR temporarily — though your payments could fluctuate.
We recommend reviewing your options about six months before your current deal ends to avoid rolling onto a higher rate.
Can You Mix Fixed and Variable Rates?
Yes — this is called a split rate mortgage. It lets you fix part of your loan for stability and keep the rest variable for flexibility.
For example, you might fix 70% of your mortgage and leave 30% variable. This can balance certainty and opportunity, though not all lenders offer it.
How to Choose Between Fixed and Variable
Here’s a simple checklist to help you decide:
Choose a fixed rate if you:
- Prefer stability and predictable budgeting
- Would struggle with payment increases
- Plan to stay in your home for several years
Choose a variable rate if you:
- Are comfortable with some risk
- Expect rates to fall
- Want the flexibility to overpay or move soon
Ultimately, the “best” mortgage isn’t about which rate is lower today — it’s about what suits your financial comfort zone and future plans.
If you’d like to see what could work best for your situation, we’re happy to help. Let’s explore your options together.
Final Thoughts
Both fixed and variable rate mortgages have their place. A fixed deal brings stability, while a variable deal brings flexibility. The right choice depends on your goals, income stability, and how much change you’re comfortable with.
At Mortgage Bridge, we help clients compare both options clearly — using real numbers, not just rate sheets — so you can make a confident, informed decision about your next step.
We’re here to help if you’d like to talk through your situation.