Fixed rate or variable mortgage – which is better?

With a fixed rate mortgage, your monthly interest payments stay the same. This means you’ll repay the same amount every month – usually for a specific period of time. This period usually lasts until your introductory rate is up. Often, this is around 2 to 5 years.

When your fixed rate period is over, you’ll start to pay a Standard Variable Rate (SVR). This differs between lenders, and can change every month. This means your monthly repayments could change with the Bank of England base rate.

At this point, you may be able to remortgage or switch mortgages, to ensure you’re getting the best deal.

Remortgaging is when you switch your mortgage deal to another lender. Another option is to switch mortgages but stay with the same lender. If you stay with the same lender, this is not classed as remortgaging.

When you can remortgage will depend on whether you have a tracker, fixed or Standard Variable Rate mortgage. Terms may also differ depending on your lender.

• Fixed rate: You can usually remortgage without incurring an early repayment charge when your fixed rate deal comes to an end. You can also come out of your deal early but you’ll likely incur a fee.

• Tracker rate: Similar to fixed rate, you can usually remortgage without a penalty when your tracker rate deal comes to an end. You can also come out of your deal early but you’ll likely incur an early repayment charge. With NatWest, we offer a Track and Switch service whereby you can switch to a fixed rate product at any time during your tracker rate deal, without incurring any charges.­­

• Standard Variable Rate: You can normally remortgage without incurring any early repayment charges once your deal ends and you’re on SVR. Though it’s a good idea to double-check with your lender.