Comparison · Mortgages · 2026/27
Variable Rate Mortgage vs Fixed Rate Mortgage UK 2026/27
A fixed rate mortgage locks your payment for the deal term. A variable rate mortgage-- tracker or SVR -- moves with (or at the lender's discretion around) Bank Rate. This 2026/27 guide compares payment certainty, Early Repayment Charges and a worked GBP 250,000 example.
Key facts -- 2026/27
- • Fixed rate: rate locked for the deal term (typically 2, 5 or 10 years)
- • Tracker rate: Bank Rate plus a fixed margin, moves automatically
- • SVR: lender's default rate, set at their discretion, usually higher
- • Rate change impact: ~GBP 30-35/month per 0.25pp on GBP 250,000
- • ERC: common on both fixed and many tracker deals during the initial period
- • Most first-time buyers: choose a fixed rate deal
How Each Rate Type Moves
A fixed rate is contractually locked -- your payment is identical every month during the deal, whatever happens to Bank Rate. A tracker mortgage rate is set as Bank Rate plus a fixed margin (e.g. Base Rate + 0.75%), so it moves automatically and transparently with each Bank of England rate decision.
The SVR is different again -- it is set entirely at the lender's discretion, not mechanically linked to Bank Rate, though lenders typically move it in the same direction as Base Rate changes over time, often with a lag.
Worked Example: GBP 250,000 Repayment Mortgage, 25 Years
Comparing a fixed deal against a tracker if Bank Rate rises by 0.5 percentage points during the term.
| Scenario | Fixed rate | Tracker rate |
|---|---|---|
| Payment before rate change | Same as after | Baseline payment |
| Payment after +0.5pp Bank Rate rise | Unchanged | ~GBP 65-70 higher/month |
| Payment if Bank Rate had fallen 0.5pp instead | Unchanged -- miss the saving | ~GBP 65-70 lower/month |
Illustrative only -- actual figures depend on your rate, term and remaining balance. Use the mortgage calculator to model your own payments under different rate scenarios.
Side-by-Side Comparison
| Factor | Fixed rate | Variable rate |
|---|---|---|
| Payment certainty | Guaranteed for deal term | Can rise or fall |
| Benefit from rate cuts | None during fix | Immediate |
| Exposure to rate rises | None during fix | Full exposure |
| Early Repayment Charge | Usually applies | Often applies (tracker); rarely on SVR |
| Best for | Tight budgets, certainty seekers | Buffer available, rate-cut expectations |