Fixed vs Variable Rate Mortgages: Which Is Right for You? (2025)
Complete guide to choosing between fixed and variable rate mortgages in the UK. Compare current rates, understand the pros and cons, and discover which option saves you money in 2025.
Fixed rates offer payment certainty while variable rates may be cheaper but fluctuate with the market.
| Type | Pros | Cons |
|---|---|---|
| 2-Year Fixed | Flexibility, lower ERCs | More frequent remortgaging |
| 5-Year Fixed | Payment security | Higher ERCs, less flexibility |
| Tracker | Falls with base rate | Rises with base rate |
Consider Your Plans
Frequently Asked Questions
What's the difference between fixed and variable rate mortgages?
A fixed rate mortgage locks your interest rate for a set period (2-10 years), keeping payments the same. A variable rate mortgage can change at any time, meaning your payments can go up or down. Fixed rates offer certainty, while variable rates offer flexibility and potential savings if rates fall.
Which is cheaper: fixed or variable rate mortgage?
It depends on what happens to interest rates. Fixed rates are typically 0.5-1% higher initially but protect you from rate rises. Variable rates start lower but can become more expensive if rates increase. In 2025's high-rate environment, 5-year fixed rates offer better value and protection for most borrowers.
Should I fix my mortgage for 2 or 5 years?
A 5-year fix offers longer protection and is only slightly more expensive than a 2-year fix (typically 0.2-0.3% difference). Choose 5 years if you want long-term certainty and expect rates to stay high. Choose 2 years if you believe rates will fall significantly by 2027 and want to remortgage sooner.
What happens when my fixed rate mortgage ends?
You automatically move to your lender's Standard Variable Rate (SVR), typically 7-8%, which is 2-3% higher than competitive fixed rates. This costs thousands extra per year. Start looking for a new deal 6 months before your fixed rate ends to avoid the expensive SVR.
Can I switch from variable to fixed rate mortgage?
Yes, you can remortgage from variable to fixed at any time. If you're on a tracker or SVR with no early repayment charges, switching is straightforward. If you're on a discount mortgage with ERCs, calculate whether the savings from switching outweigh the exit fees.