Pros and Cons of Fixed vs. Tracker Mortgages for Contractors

Pros and Cons of Fixed vs. Tracker Mortgages for Contractors

Blog Article

Choosing between a fixed-rate and a tracker-rate mortgage is an important decision—especially for contractors, whose income may vary. Both options come with advantages and trade-offs, and the best choice depends on your financial situation and risk tolerance.

Let’s explore the pros and cons of each.

Fixed-Rate Mortgages
A fixed-rate mortgage locks in your interest rate for a set period—typically 2, 3, or 5 years.

Pros:
Predictable monthly payments – Ideal if your income fluctuates

Protection from interest rate rises

Easier budgeting and long-term planning

Cons:
You may miss out if interest rates drop

Early repayment charges if you exit the deal early

Slightly higher rates than trackers at the start

Tracker Mortgages
Tracker mortgages follow the Bank of England base rate, plus a set percentage. Your payments can rise or fall in line with the rate.

Pros:
Potentially lower initial rates

You benefit if the base rate goes down

Some tracker mortgages have low or no early exit fees

Cons:
Payments can rise if the base rate increases

Less predictable—can be risky if your income isn’t stable

Harder to budget for long-term

Which Is Better for Contractors?
If you’re a contractor with:

Stable income and a good buffer: A tracker may work

Fluctuating income or prefer certainty: Fixed-rate is safer

Also consider how long you plan to stay in the property. Fixed deals are often better for long-term planning, while trackers can be flexible for short-term needs.

Final Thoughts
There’s no one-size-fits-all answer. The right mortgage depends on your goals, income pattern, and how comfortable you are with interest rate changes.

At Contractor Mortgage Solutions, we help you weigh the pros and cons of each type and find the mortgage that suits your contracting lifestyle and financial strategy.