Fixed or tracker: comparing the deal period
A fixed rate buys certainty; a tracker buys exposure to the Bank of England base rate. This compares the total cost of each over the deal period, fees included.
What this calculator does
- Compares the total cost of a fixed and a tracker deal over the same period.
- Includes product fees on both sides, and can add them to the balance.
- Reports the average base rate at which the two would break even.
- Shows the balance remaining under each at the end of the deal.
How the calculation works
The comparison runs both products over the deal period and totals what each actually costs, rather than comparing headline rates. The fixed side is straightforward: one rate, one payment, plus the product fee. The tracker side starts at the base rate plus the lender's margin and then moves as you expect the base rate to move, so its payment changes over the period. Adding the fees to each side matters more than people expect over a short deal, because a £999 fee spread across 24 months is worth about £42 a month — often more than the rate difference being argued about. The most useful output is the break-even average base rate: the average level the base rate would have to sit at across the deal for the two to cost the same. That converts a forecast you cannot make into a threshold you can reason about, because you only need a view on whether the average will be above or below it.
The rule
Total deal cost = payments over the deal period + product fee, computed separately for the fixed rate and for the tracker at (base rate + margin) as the base rate moves.
Step by step
- Work out the fixed payment and total it across the deal period, then add the fixed product fee.
- Start the tracker at the current base rate plus the lender's margin.
- Move the base rate by the expected annual change across the deal period.
- Total the tracker payments and add the tracker product fee.
- Compare the totals, and solve for the average base rate that would make them equal.
Worked example
A £250,000 mortgage over 25 years: a 4.5% two-year fix with a £999 fee, against a tracker at base plus 0.75% with no fee, with the base rate at 3.75% and expected to fall by 0.25% a year.
What was entered
| Mortgage borrowing amount | £250,000 |
|---|---|
| Mortgage term | 25 years |
| Fixed interest rate | 4.5% |
| Fixed product fee | £999 |
| Tracker margin over base rate | 0.75% |
| Current Bank of England Base Rate | 3.75% |
| Comparison deal period | 2 years |
| Expected annual base rate change | −0.25% |
The arithmetic
- The tracker starts at 3.75% + 0.75% = 4.50%, exactly matching the fix, so both open at £1,389.58 a month.
- Over two years the fixed deal costs £34,348.95 including its £999 fee.
- The tracker costs £32,940.41, because the expected fall in the base rate reduces its payments while the fix cannot move.
- On these expectations the tracker is £1,408.54 cheaper across the deal.
- The break-even average base rate is 4.04%: if the base rate averages above that, the fix wins instead.
- Since the base rate starts at 3.75%, it would have to rise materially and quickly for the fix to come out ahead.
What the calculator returns
| Fixed monthly payment | £1,389.58 |
|---|---|
| Fixed total cost over the deal | £34,348.95 |
| Tracker total cost over the deal | £32,940.41 |
| Difference over the deal | £1,408.54 |
| Break-even average base rate | 4.04% |
Key assumptions
- The base rate moves smoothly by the annual change you entered, rather than in the steps the Bank of England actually uses.
- The lender passes base rate changes straight through to the tracker rate, which is what a true tracker does.
- Both products are compared over the same deal period and the same mortgage term.
Limitations
- Nobody can forecast the base rate. The break-even figure is the useful output precisely because it does not require one.
- The value of certainty is not modelled. A fix that costs slightly more but makes the household budget predictable can be the right choice on numbers that say otherwise.
- Early repayment charges, which usually apply to a fix and often not to a tracker, are not included and can matter if you may need to move or repay early.
- Some trackers carry a floor below which the rate will not fall, and some revert to a different rate mid-deal.
- Adding fees to the balance means paying interest on them for the rest of the term, which costs more than the fee itself.
Common questions
What does the break-even base rate actually tell me?
Should I add the product fee to the mortgage?
Is a tracker riskier?
Why do both products start at the same payment here?
Related calculators
- UK Mortgage Calculator — Work out the payment on either product across the full term.
- Mortgage Amortisation Calculator — See where the balance lands at the end of the deal period.
- Mortgage Overpayment Calculator — Trackers often allow unlimited overpayments where fixes do not.
Official sources
Every figure in this guide was checked against the sources below. Where a source could not confirm a figure, it is marked as requiring verification rather than presented as settled.
- Bank Rate — Bank of EnglandThe base rate a tracker mortgage follows
- Fixed, variable or tracker mortgage? — MoneyHelperDifferences between fixed, tracker and variable products