Choosing the right mortgage type is one of the most important financial decisions you’ll make when buying a home.
Whether you’re a first-time buyer or looking to remortgage, understanding the difference between fixed and variable mortgages can save you thousands of pounds—and plenty of stress—over the life of your loan.
At Your Mortgage Shop, we believe it’s essential to find a mortgage that not only suits your current situation but also protects you against future changes.
Let’s take a closer look at the pros and cons of fixed and variable mortgages to help you make an informed choice.
What is a Fixed-Rate Mortgage?
A fixed-rate mortgage means your interest rate stays the same for a set period, usually two, five, or even ten years. Your monthly payments won’t change, giving you security and peace of mind.
Pros of a Fixed-Rate Mortgage:
-
Stability: Your monthly payments remain consistent, making it easier to budget.
-
Protection: You’re shielded from interest rate rises during your fixed term.
-
Peace of mind: No surprises if the Bank of England base rate increases.
Cons of a Fixed-Rate Mortgage:
-
Higher initial rates: Fixed deals often start slightly higher than the lowest variable rates.
-
Early repayment charges: If you want to move or pay off your mortgage early, you could face hefty penalties.
-
Limited flexibility: You’re locked into the deal for the fixed period.
What is a Variable-Rate Mortgage?
A variable-rate mortgage means your interest rate can move up or down. It could be linked to the Bank of England’s base rate (tracker mortgages) or set by your lender (standard variable rate, or SVR).
Pros of a Variable-Rate Mortgage:
-
Lower starting rates: Initially, variable rates are often cheaper than fixed ones.
-
Potential savings: If interest rates fall, so will your mortgage payments.
-
More flexibility: Tracker mortgages often have lower or no early repayment charges.
Cons of a Variable-Rate Mortgage:
-
Unpredictable payments: Your monthly amount can increase without much notice.
-
Less security: Budgeting becomes harder if your payments fluctuate.
-
Higher long-term costs: If rates rise sharply, your mortgage could become much more expensive.
Which Mortgage Type is Right for You?
Choosing the right mortgage type depends on your personal circumstances:
-
Need stability? A fixed-rate mortgage could give you the certainty you want, especially if you’re on a tight budget or expect rates to rise.
-
Feeling flexible? If you’re confident that you can handle changes—or if rates are expected to stay low—a variable mortgage could save you money.
It also depends on how long you plan to stay in your home, your appetite for risk, and your future financial plans.
How Your Mortgage Shop Can Help
At Your Mortgage Shop, we understand that every buyer’s situation is unique. Our friendly, expert advisors take the time to understand your needs and search the market to find the best mortgage deal for you. Whether you’re leaning towards a fixed or a variable mortgage, we’ll help you weigh the options and secure the right choice for your future.
Don’t leave such an important decision to chance—contact Your Mortgage Shop today for expert, personalised advice.
