Mortgage adverts lead with a headline interest rate, which makes it feel like the interest rate is the whole decision. It isn't. It's one of several numbers that combine to determine what a mortgage actually costs — and it's rarely the one that catches people out.
The actual comparison to make isn't "which rate is lowest" — it's which combination of rate, fees, and term actually costs less over the period you'll be on it.
Fixed vs tracker, actually explained
Fixed rate. Your interest rate, and therefore your monthly payment, stays the same for a set period, regardless of what happens to wider interest rates. Predictable, at the cost of missing out if rates fall during that period.
Tracker rate. Your rate moves in line with a reference rate (usually the Bank of England base rate) plus a fixed margin. Payments can rise or fall during the deal, which suits people comfortable with some uncertainty in exchange for potentially paying less if rates fall.
Neither is universally better: it depends on how much certainty you want and what you think is likely to happen to rates during your deal period, which nobody can predict with confidence.
The fees that don't make the headline
The advertised rate is only part of the cost. Worth checking for on any mortgage deal:
- Arrangement (or product) fee: often charged for setting up the deal, sometimes over £1,000, and can sometimes be added to the loan rather than paid upfront.
- Valuation fee: for the lender confirming the property is worth what you're paying.
- Early repayment charges: a penalty for paying off or switching before a fixed or tracker deal ends.
- Exit fees: a smaller administrative charge some lenders apply when a mortgage ends.
A lower headline rate with a high arrangement fee can end up costing more overall than a slightly higher rate with no fee. The only way to know is by comparing the total cost over the deal period, not just the rate.
Common mortgage myths, actually addressed
"A bigger deposit always gets you a meaningfully better rate."
Lenders offer better rates at certain deposit thresholds, commonly around 10%, 15%, 25% of the property value, so it's the threshold that matters, not simply "more deposit." Crossing a threshold can help; adding a bit more within the same band often doesn't change the rate.
"The lowest rate on a comparison site is the best deal for me."
The lowest rate might come with the highest fees, or might not be available for your deposit size or circumstances. What's cheapest depends on your specific numbers, not the top of a general list.
"Once I've fixed a rate, I'm stuck with the same lender forever."
A fixed or tracker deal has an end date, at which point you can remortgage, switch to a new deal, potentially with a different lender, without necessarily paying an early repayment charge, since the original deal has finished.
A simple way to actually compare deals
- Work out your loan-to-value: the mortgage amount as a percentage of the property value, since this determines which rate bands you can access.
- Compare total cost over the deal period, not just the headline rate: add in arrangement fees and any other charges.
- Check the early repayment charge in case your plans might change before the deal ends.
- Note the date your current deal ends, so you're not moved onto a lender's default rate by missing the point to remortgage.
Compare mortgage deals
See current rates from lenders based on your deposit and term.
Want the actual numbers? Try our Mortgage Calculator — see what a mortgage might actually cost you each month, repayment or interest-only. Buying a home also means Stamp Duty; our Stamp Duty Calculator works out what you'd owe.
This explainer covers how mortgages work in general. It isn't personalised financial advice — for guidance specific to your situation, a mortgage broker or regulated financial adviser can help.