Fixed-rate mortgages
A fixed rate locks your interest rate — and therefore your monthly payment — for a set period, usually two to five years. For contractors with variable income, that certainty over your largest outgoing is often worth more than chasing the lowest headline rate.
What a fixed rate is
With a fixed rate, your interest rate is contractually held for an agreed introductory period, commonly two to five years, though products range from short terms to ten years or more. Whatever happens to the Bank of England base rate, your payment doesn’t move until the fix ends.
At the end of the fixed period the mortgage reverts to the lender’s standard variable rate — which is why planning a remortgage before that point matters.
| Factor | Fixed rate | Tracker |
|---|---|---|
| How the rate behaves | Locked for the agreed term | Moves with the BoE base rate plus a margin |
| If rates rise | Payment unchanged until the fix ends | Payment rises |
| If rates fall | No benefit until the fix ends | Payment falls |
| Budgeting | Certain | Variable |
| Early repayment charges | Usually apply during the fix | Often none — but check the product |
Why contractors favour them
Independent income rises and falls with contracts and gaps. Fixing your mortgage payment removes one large variable from the equation, making budgeting far easier across leaner months.
- Certainty — your payment can’t rise during the fixed term.
- Protection against base-rate increases.
- Easier planning around variable contract income.
The trade-offs
- If rates fall, you don’t benefit until the fix ends.
- Early repayment charges usually apply if you leave during the fixed period.
- Longer fixes can carry a slightly higher rate for the extra certainty.
Fixed rate, answered
How long should I fix for?+
It depends on your plans and appetite for certainty. Two years keeps you flexible; five years locks in budgeting for longer but commits you for longer. If you expect to move or repay early, weigh the early repayment charges.
Can I overpay on a fixed rate?+
Most lenders allow overpayments of up to 10% of the balance each year without penalty. Beyond that, an early repayment charge may apply during the fixed period.
What happens when my fixed rate ends?+
You roll onto the lender’s standard variable rate unless you remortgage or switch to a new deal. The SVR is usually far higher, so most borrowers arrange a new rate to start as the fix ends.