A fixed-rate mortgage gives you a set payment but usually limits overpayments, often to 10% of the balance a year, with early repayment charges above that. A tracker moves with the Bank of England's Bank Rate, so your payment can change within weeks, but many trackers let you overpay as much as you like. That means tracker borrowers need a bigger cash buffer for rate rises, while fixed-rate borrowers need to plan for the payment change when their deal ends.
This guide is about the savings side of that choice. For help choosing between the two products themselves, see our fixed vs tracker mortgage comparison.
How the two types differ
| Feature | Fixed rate | Tracker |
|---|---|---|
| Monthly payment | Set for the deal period | Moves with Bank Rate |
| Early repayment charges | Usually, during the fix | Often none or low, but check |
| Overpayments | Often up to 10% of the balance a year | Often unlimited |
| Main risk | Payment jump when the fix ends | Payment rises during the deal |
A tracker is priced as Bank Rate plus a set margin. Bank Rate has been 3.75% since December 2025, and the next decision is due on 5 November 2026. Some trackers have a collar, a minimum rate they will not fall below even if Bank Rate is cut, so check the terms.
How much a rate change could cost
On a £200,000 repayment mortgage over 25 years, each quarter-point change makes a difference of roughly £28 to £29 a month.
| Mortgage rate | Monthly payment | Change from 4.5% |
|---|---|---|
| 4.00% | £1,055.67 | -£55.99 |
| 4.50% | £1,111.66 | None |
| 5.00% | £1,169.18 | +£57.52 |
| 5.50% | £1,228.17 | +£116.51 |
These figures assume a full 25-year term; in practice your lender recalculates based on your remaining balance and term. Try your own numbers in the mortgage calculator.
Savings buffer on a tracker
On a tracker, your emergency fund has two jobs: covering normal emergencies and absorbing rate rises. A practical approach is to work out what your payment would be if rates rose by one percentage point, and keep enough in easy-access savings to cover that difference for a year, on top of your usual emergency fund. In the example above, a one-point rise adds about £116 a month, so roughly £1,400 for a year.
Many tracker borrowers also budget as if their payment were already higher and save the difference. If rates rise, the money is there. If they fall or stay put, you have built savings or can use them to overpay.
Savings buffer on a fixed rate
On a fix, your payment will not change until the deal ends, so the main job of your savings is the usual emergency fund. The risk is the end date. Look at current rates about six months before your fix ends (many lenders let you secure a new deal around then) and estimate your new payment. If it is likely to be higher, start saving the difference now so the jump is easier to absorb. Our guide on when to remortgage explains the timing.
Overpaying on each type
Overpaying reduces the interest you pay and can shorten your term. On a £200,000 mortgage at 4.5% over 25 years, overpaying £100 a month cuts the term to about 21 and a half years and saves around £21,000 in interest. The rules for doing it differ by mortgage type.
- Fixed rate: check your annual overpayment allowance, often 10% of the balance, and whether it resets on the calendar year or the mortgage anniversary. Going over it can trigger an early repayment charge, often a percentage of the excess.
- Tracker: if there are no early repayment charges, you can overpay freely and at any time, which makes it easier to keep cash in savings and overpay in lump sums when you are ready.
- Both: ask whether overpayments reduce your monthly payment or your term, and tell your lender which you prefer.
Save first, then overpay
Money overpaid into a mortgage is usually hard to get back without borrowing again, so build your emergency fund before overpaying. After that, compare your mortgage rate with what you would earn on savings after tax. If your mortgage rate is higher, overpaying generally saves more; if a savings account pays more after tax, keeping the cash may be better, at least for now. Compare rates with the savings rates tool and test overpayments in the mortgage overpayment calculator.
A middle route works well with a tracker: save monthly into an easy-access account and overpay a lump sum once or twice a year. You keep access to the money for longer, and still cut your interest. SYM can help you build that pot with small daily amounts. If you want both flexibility and lower interest, an offset mortgage is another option.
Frequently asked questions
Can I overpay a tracker mortgage?
How much can I overpay on a fixed-rate mortgage?
How quickly does a tracker mortgage change after a Bank Rate decision?
Should I overpay my mortgage or keep savings?
Is a tracker or fixed rate better for saving money?
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