What is the difference between fixed, tracker and variable rate mortgages?

They differ in what determines your interest rate, and therefore in who carries the risk of rates moving.

Fixed rate. The rate is locked for a set period — typically two, three, five or ten years. Payments are identical throughout regardless of what happens to base rate.

Advantages: certainty, which makes budgeting straightforward and protects you if rates rise.

Costs: you pay for that certainty, since fixed rates generally sit above the equivalent tracker at the time of fixing. You gain nothing if rates fall. And early repayment charges are usually substantial — often a percentage of the balance, tapering over the term — which restricts overpaying beyond an allowance, moving house without porting, or remortgaging early.

Tracker. The rate tracks the Bank of England base rate at a set margin — for example base plus 0.75% — and moves automatically when base rate moves, usually within a month.

Advantages: transparent, since the lender cannot change the margin arbitrarily, and you benefit immediately from cuts. Often cheaper initially, and many have no early repayment charges, which suits those expecting to move or repay early.

Costs: payments rise with rates, and the increase is not capped unless the product has a collar.

Standard variable rate (SVR). The lender's own default rate, which it sets at its discretion. It is not tied to anything — the lender can move it when base rate has not.

You land on SVR automatically when a fixed or tracker deal ends. It is almost always the most expensive option, sometimes dramatically so, and drifting onto it is one of the most common and costly mortgage mistakes. Set a reminder several months before your deal ends.

Discounted variable is a discount off the lender's SVR, so it inherits the SVR's discretionary nature.

Consider the fee alongside the rate — a low rate with a £2,000 fee can cost more on a small balance.