Fixed vs variable mortgages study

Choices always give god reasons for comparison; one can know what is better as an option. These choices become even more critical when it is about a big financial decision. Mortgages are available with different deals on interest rates.

Fixed-rate mortgages and variable rate mortgages are the two most common types. Both have different features and benefits and also downsides. However, to make final choice borrowers seek unbiased information to avoid a regretful decision on their mortgage choice.

Here is how both the mortgage types with fixed and variable rate work –

The introduction  

Standard Variable Rate Mortgage – This mortgage type is volatile on the part of interest rates, and the lender decides the rate quote. It can be changed whenever it wants; however, the SVR is influenced by the base rate of the Bank of England. But the lender decides how much more will add in it while offering the funds. According to the change in the interest rate, the number of monthly instalments keeps changing.

Fixed-rate mortgage – As the name suggests, the fixed-rate mortgages remain the same in their rate of interest. Throughout the term, the rate of interest remains the same, and as a result of the monthly instalments to remain the same. It is always lower than the standard variable rate. Those who do not want to face the uncertainties of the interest rates should try for a fixed-rate mortgage.

SVR Mortgage, Fixed Mortgage – Difference Between The Two

Of course, both are related to the same product that is a mortgage, but both serve different purposes. On many aspects, the SVR mortgage is different from the fixed-rate mortgage.

Standard variable rate mortgage Fixed mortgage
The rate of interest keeps changing The rate of interest remains the same
The rates are high The rates are low
Monthly instalments are big Monthly instalments are decided
The lender can change at any point in time The lender cannot change during the tenure

The pros and cons

Everything has its positive and negative sides. Have a look at the pros and cons of the SVR and fixed cost mortgages. You can develop a better understanding when you know all the related aspects of a subject.

Standard Variable rate – Pros and Cons

Pros Cons
If the interest rates go down, you can enjoy smaller instalments. Lender controls the rate policy, and thus you are driven according to the wish of the lender.
They are easy to qualify These mortgages are unpredictable
The Arrangement fee is lower Missed repayments add interest at a faster rate

Few Facts About The Variable Rate

  • Not always, conditions are out to control because some lenders put a limit on the rise of the rate. They decide that up to which level they will increase the interest rates as compared to the base rate.
  • People with volatile monthly income, such as self-employed applicants may face difficulty in getting approved for a standard variable rate.
  • SVR usually have no early repayment charge to let the borrower pay off early and get rid of the anxiety of rate change.

Fixed-rate – Pros and Cons

Pros Cons
The rate of interest is fixed and low which ensures a lower total cost You cannot explore the benefit of a smaller instalment if rates go low.
The instalments are fixed and pocket-friendly It is always challenging to qualify for fixed-rate mortgages.
The lender cannot change the rate during the tenure The arrangement fee is higher as compared to SVR

The above mention of the pros and cons of both the mortgage types are helpful and can work as the eye-opener. The unbiased information of both versions helps explain things in a better manner.

Facts About a Fixed-Rate Mortgage

  • To qualify for a fixed-rate mortgage, the applicant needs to have a good credit score. In the case of poor credit, the borrower needs to apply through fixed bad credit mortgages. Besides, either there should be a big deposit, or in case of lower-income, the additional collateral or a guarantor becomes the saviour.        
  • A fixed-rate mortgage is among the cheapest versions and a bit difficult to attain, but once you get the deal becomes predictable. 
  • In a fixed-rate mortgage, the rate of interest remains the same only for a specific time that is 2 years or 5 years. Maximum is 5 years, but you need to prove affordability for the particular number of years you want to qualify for.                                                


Perhaps now you can make a better decision on what will go best for you, a fixed rate or variable rate. However, it is not about the rate of interest. Your personal conditions are also decisive. You may yearn to get a fixed rate but will get a variable rate as you may fail to qualify for the first one. For a borrower with stable finances, not the rate of interest is impossible. Lenders chase such applicants.