Amongst the two most popular types of mortgages taken out in the UK today are the standard variable rate mortgage and the fixed rate mortgage. There are other mortgage products available that also come under the umbrella of a variable rate mortgage, such as a base tracker mortgage or a discounted mortgage.



If you are new to the world of mortgage it may be difficult to decide which mortgage to opt for, and there are pros and cons to both variable and fixed rate mortgages.

When deciding whether to opt for a variable or a fixed rate deal it is important that you consider the pros and cons of both so that you can make a more informed decision with regards to which type of mortgage will prove most suitable for your needs and pocket. Your mortgage is an important long term commitment and in order to avoid hassles and additional costs it is important that you get it right first time.

Variable rate mortgages

There are a number of mortgages that come under the umbrella of variable rate mortgages, and this includes lenders' own standard variable rate deals, discounted rate mortgages, capped rate mortgaged, and base tracker mortgages. A variable rate mortgage is where the interest rate can vary, and can go up or down in line with the Bank of England base rate.

The main benefits to a variable rate mortgage is that if interest rates fall then your rate of interest and your mortgage repayment will also fall, which means more money for you.

Another benefit is that the initial interest rate charged on the variable rate deal is lower than the current fixed rate deals, and you can get some competitive deals from a range of lenders. There is also a choice of variable rate deals, so you should not have too much difficulty finding one to suit your needs.

One the downside the interest rates on variable rate deals can also go up, and as has been seen over the past year following a series of Bank of England rate rises this can quickly lead to unmanageable repayments and the possibility of repossession.

Fixed rate mortgages

A fixed rate mortgage is a mortgage where the interest rate is frozen for a specified period, so no matter what happens with the base interest rate your fixed rate will remain unaffected. Fixed rate mortgage have become increasingly popular, and are particularly popular amongst first time buyers. You can get different fixed rate lengths, although the most common are between two and five years.

The advantages of fixed rate mortgage is that they offer financial stability and peace of mind, because you know exactly what your repayment will be each month and there will be no fluctuation throughout the term of the fixed rate. This means that you can enjoy easier financial management, which is perfect for many first time buyers that are not used to having to budget.

One of the main disadvantages is that if the base interest rate starts to fall your fixed rate will not fall ? it will remain fixed. Therefore you will have to continue making the higher repayments at the higher rate of interest.