Fixed or Tracker Mortgage: Which One Is Right for You in 2025?

With the Bank of England base rate falling and inflation easing, many homebuyers and homeowners are asking the same question: "Should I get a fixed or tracker mortgage in 2025?"

Choosing between a fixed or tracker mortgage depends on your financial situation; fixed offers stability, tracker changes with the Bank of England base rate.

In this easy-to-understand guide, we'll break down the differences between tracker and fixed-rate mortgages, weigh up the pros and cons of each, and help you figure out which option might suit you best in today's market.

Confused about whether a fixed-rate or tracker mortgage is best for you? Call Infinite Finance London now on 020 3813 7800 for personalised advice.

Table of Contents

What Is a Fixed-Rate Mortgage?

A fixed-rate mortgage means your interest rate stays the same for a set period, typically 2, 3, 5, or even 10 years. This means your monthly mortgage payments remain the same throughout your fixed term, regardless of what happens to the Bank of England base rate.

What Is a Tracker Mortgage?

A tracker mortgage is a type of variable-rate home loan that follows, or "tracks", the Bank of England base rate, plus a fixed percentage. Therefore, when the base rate changes, your mortgage repayments adjust accordingly.

For example, if your tracker mortgage is set at the base rate + 0.75% and the base rate is 4.25%, your interest rate would be 5%. If the base rate drops to 3.75%, your rate becomes 4.5%, resulting in lower monthly payments.

In 2025, many UK homebuyers and those remortgaging are closely monitoring tracker mortgage deals, particularly with the prospect of base rate reductions later in the year.

What's the Difference Between a Fixed and Tracker Mortgage in the UK?

The main difference between a fixed and tracker mortgage is how the interest rate behaves. A fixed-rate mortgage gives you a set interest rate for a specific period, usually 2, 3, or 5 years, which means your monthly payments stay the same.

A tracker mortgage, on the other hand, follows the Bank of England base rate, so your payments can go up or down depending on economic conditions. If you're exploring first-time buyer mortgage options in the UK for 2025, it's crucial to weigh up whether you prefer payment stability or the chance to save if rates drop.

Pros of Fixed-Rate Mortgages

1. Payment Stability

The biggest advantage of a fixed-rate mortgage is that your monthly repayments stay the same throughout the deal, whether it's 2, 5, or 10 years. This makes it much easier to budget, especially if you're a first-time buyer or working with a tight household income. You'll always know what's going out of your account each month, no surprises!

2. Protection from Interest Rate Rises

If the Bank of England base rate increases during your fixed term, your mortgage interest rate won't change. That means you're protected from sudden hikes that could make your mortgage more expensive.

3. Peace of Mind

Many buyers appreciate the certainty that comes with a fixed deal, especially during times of economic uncertainty, like we're still seeing in 2025. You can relax knowing your mortgage repayments won't go up unexpectedly.

Cons of Fixed-Rate Mortgages

1. You Might Miss Out if Rates Fall

If interest rates drop during your fixed term, you won't benefit from lower monthly payments, unlike with a tracker mortgage. In other words, you could be stuck paying more than you need to.

2. Early Repayment Charges (ERCs)

Most fixed-rate mortgage deals come with early repayment charges if you want to switch deals or pay off your mortgage early. These can be quite costly, sometimes thousands of pounds, so flexibility is limited.

3. Higher Interest Rates (Sometimes)

Compared to tracker mortgages or variable-rate deals, fixed rates can start a bit higher, especially if you're locking in for a longer term, like 5 or 10 years. You're essentially paying for the stability and certainty upfront.

Pros of Tracker Mortgages

1. You Could Pay Less if Rates Drop

The main appeal of a tracker mortgage is that your interest rate follows the Bank of England base rate, plus a fixed percentage (e.g. base rate + 0.75%). If the base rate falls, so do your monthly repayments, which could mean big savings.

In short, if the economy shifts in your favour, your mortgage becomes cheaper.

2. Often Lower Initial Rates

Tracker mortgage deals often start with lower interest rates than fixed-rate products. That can be especially appealing for first-time buyers or anyone looking to keep monthly costs down initially.

3. More Flexibility

Some tracker deals come with no early repayment charges (ERCs), meaning you can switch or pay off your mortgage without hefty penalties, something many fixed-rate mortgages don't offer. Perfect if you want the freedom to remortgage sooner or pay off lump sums.

Cons of Tracker Mortgages

1. Your Payments Can Go Up

If the Bank of England base rate increases, your mortgage repayments will rise too. Unlike a fixed-rate deal, there's no cap on how high your payments can go, so it can feel unpredictable. This could be a concern if you're on a strict budget or want payment certainty.

2. Harder to Budget Long-Term

Because your interest rate can change at any time, it's harder to plan long-term finances. Some months might be cheaper, others more expensive. This uncertainty can be stressful, especially for first-time buyers or families.

3. Less Stability in a Volatile Economy

In times of economic uncertainty (like we're still seeing in parts of 2025), tracker mortgages can feel risky. You might start off saving money, but rates could climb faster than expected.

Is a Fixed-Rate Mortgage Right for You?

If you value stability and want to know exactly what you're paying each month, a fixed-rate mortgage could be the perfect fit. It's ideal for:

• First-time buyers who are budgeting carefully.
• Homeowners looking for long-term certainty.
• Anyone worried about rising interest rates in the future.

However, if you think interest rates will drop and you're comfortable with a bit of risk, a tracker mortgage might be worth exploring instead.

Is a Tracker Mortgage Right for You?

A tracker mortgage could be a great option if:

• You think interest rates will fall or stay low.
• You're comfortable with some payment fluctuation.
• You want the potential to save money and enjoy more flexibility.

But if you prefer predictable monthly payments and don't want to worry about rate changes, a fixed-rate mortgage might offer more peace of mind.

Which Mortgage is Right for You in 2025?

Here's a quick comparison based on your goals:

The right choice comes down to your financial situation, risk tolerance, and expectations about interest rates over the next few years.

Which Is Better for First-Time Buyers?

There's no universal "best" option, it depends on your personal circumstances, risk tolerance, and market conditions.

You Might Prefer a Fixed-Rate Mortgage If:

• You want certainty over your monthly payments.
• You're working with a tight budget and can't afford surprises.
• You feel interest rates might rise in the near future.

You Might Prefer a Tracker Mortgage If:

• You're happy with a little uncertainty in exchange for possible savings.
• You believe interest rates will stay low or drop.
• You want the freedom to switch mortgages without hefty penalties.

Can I Switch from a Fixed to a Tracker Mortgage?

Yes, you can switch from a fixed-rate mortgage to a tracker mortgage, but timing matters. If you're still in the middle of a fixed-term deal, you may face early repayment charges (ERCs) for exiting early.

However, if your fixed rate is due to end soon, you can start exploring first-time buyer tracker mortgage options 3 to 6 months in advance. Always check with your lender or mortgage broker before switching to ensure it's financially worthwhile.

Final Thoughts: Fixed or Tracker Mortgage?

A fixed-rate mortgage is often the safer and more manageable choice, especially in uncertain markets. It offers budgeting stability and shields you from surprise rate hikes.

However, if you're more financially flexible and expect rates to stay low or fall, a tracker mortgage could help you save money, just be prepared for changes in your monthly payments.

Should I Speak to a Mortgage Adviser Before Choosing a Fixed or Tracker Mortgage?

Absolutely. With so many options and changing UK mortgage rates in 2025, a qualified mortgage adviser can help you understand whether a fixed or tracker mortgage is better for your situation. They'll assess your income, deposit, risk profile, and future goals to recommend the most suitable deal.

Our mortgage advisers have access to exclusive mortgage rates not available on comparison sites, which could save you money over the long term.

Need Help Choosing the Right Mortgage in 2025?

Still deciding between a Fixed or Tracker Mortgage? Speak to our independent mortgage broker in London today on 020 3813 7800 for expert guidance.

We'll assess your personal circumstances and compare the latest fixed and tracker mortgage rates to find the best fit for your needs.