Is a Fixed or Tracker Mortgage Better for Contractors?

Is a Fixed or Tracker Mortgage Better for Contractors?

Blog Article

Choosing between a fixed-rate and a tracker mortgage can be tricky — especially for contractors with fluctuating income. Each has its pros and cons, and the right choice depends on your financial situation and long-term goals.

What Is a Fixed-Rate Mortgage?
A fixed-rate mortgage locks in your interest rate for a set period, usually 2, 3, or 5 years. This means your monthly payments stay the same, no matter what happens to interest rates.

Pros:

Predictable monthly payments

Protection from interest rate rises

Easier budgeting

Cons:

Less flexibility if interest rates fall

Early repayment charges may apply if you switch deals early

What Is a Tracker Mortgage?
A tracker mortgage follows the Bank of England base rate, plus a set margin. So, your monthly payments can go up or down depending on changes in the base rate.

Pros:

Lower initial rates (in some cases)

You may benefit from interest rate cuts

Some deals have no early exit fees

Cons:

Payments can increase if interest rates rise

Less predictable, which can be tough if your income varies

Which Is Best for Contractors?
For many contractors, a fixed-rate mortgage offers peace of mind and stable payments — particularly if your contracts vary or you’re just starting out. However, if you have a stable contracting income and can handle some risk, a tracker mortgage could save you money in the long run.

The key is to assess your risk tolerance, future plans, and income stability.

Let’s Find the Right Deal for You
At Contractor Mortgage Solutions, we’ll help you weigh up your options and guide you to the best deal for your situation. Whether you want stability or flexibility, we’re here to support you every step of the way.

Speak to our team today and make your mortgage decision with confidence.