Mortgage Advisor Guide: Fixed vs. Variable Rate Mortgages Explained

Please note: Should you have a requirement or wish to discuss Equity Release or Lifetime Mortgages in further detail this would be by referral to our approved Equity Release partners.

When searching for the right mortgage, choosing between a fixed-rate mortgage and a variable-rate mortgage can significantly impact your monthly payments. As an experienced mortgage advisor, we’re here to help you understand the key differences so you can make an informed decision that suits your financial goals.

Mortgage Advisor Insight: Fixed vs. Variable Rate Mortgages – What’s the Difference?

The type of interest rate you choose will directly affect your mortgage payments, financial stability, and long-term affordability. Here’s a breakdown of both options:

Fixed-Rate Mortgages: Stability & Predictability

A fixed-rate mortgage means your interest rate remains the same for a set period, usually between 2 to 10 years. This option offers security and predictable payments, making it easier to budget, whilst also providing peace of mind.

Advantages of a Fixed-Rate Mortgage:

✔ Consistent monthly payments – No surprises, making financial planning easier.
✔ Protection from interest rate rises – Even if the Bank of England base rate increases or the banks’ standard variable rate, your rate stays the same.
✔ Long-term stability – In recent times, 5-year fixed mortgage rates tend to be cheaper than 2-year fixed rates, making them a popular choice for homeowners looking for security.

Variable-Rate Mortgages: Flexibility & Potential Savings

Variable-rate mortgages, on the other hand, mean your interest rate can change over time, depending on market conditions. While this offers potential savings, it also comes with the risk of higher payments if rates rise.

Types of Variable-Rate Mortgages

1. Tracker-Rate Mortgage
   
   • Directly follows the Bank of England base rate plus a set percentage.
   • Your payments will increase or decrease depending on market interest rates.
     
2. Discount-Rate Mortgage
   
   • Offers a discount on the lender’s standard variable rate (SVR) for an agreed period.
   • Payments can still fluctuate if the SVR changes.
     
3. Standard Variable Rate (SVR)
   
   • The lender’s default interest rate after your fixed or discounted deal ends.
   • Can increase or decrease at the lender’s discretion.

Which Mortgage Is Right for You?

The best option depends on your financial situation, risk tolerance, and long-term plans. A fixed-rate mortgage offers peace of mind, while a variable-rate mortgage can provide potential savings if rates remain low.

Speaking with a mortgage advisor near you can help you navigate the options and find the best mortgage deal for your needs.

Get Expert Mortgage Advice from MME Mortgages Today

Choosing the right mortgage is a big financial decision. As experienced mortgage advisors, we can help you explore your options, compare rates, and secure the best deal for your circumstances.

Looking for a mortgage advisor near you? Get in touch today to find out how we can help.

Find out more