Is a Fixed or Variable Rate Better for Contractors?

Is a Fixed or Variable Rate Better for Contractors?

Blog Article

Understanding the Two Options
When choosing a mortgage, contractors often ask whether a fixed rate or variable rate is the better option. Each has its pros and cons, and the right choice depends on your financial situation, future plans, and risk tolerance.

Fixed Rate Mortgages: Stability and Security
A fixed rate mortgage means your interest rate—and monthly repayments—stay the same for a set period, usually 2, 3, or 5 years. This option is ideal if:

You want predictable monthly payments

You’re planning long-term budgeting

You’re concerned about interest rates rising

For contractors whose income may fluctuate, fixed rates offer stability, making it easier to plan financially during slower work periods.

Variable Rate Mortgages: Flexibility and Risk
A variable rate mortgage means your interest rate can change, depending on the lender’s standard variable rate or the Bank of England base rate. This option can be attractive if:

You expect interest rates to stay low or drop

You want flexibility with early repayment

You're planning to move or remortgage soon

However, variable rates come with the risk of increasing payments, which may be challenging during contract gaps or reduced income.

What’s Best for Contractors?
There’s no one-size-fits-all answer. A fixed rate is often better for those seeking security, especially if you’re new to contracting or expect changes in your income. Meanwhile, a variable rate may suit experienced contractors with stable earnings who are comfortable managing fluctuations.

Get Tailored Advice
At Contractor Mortgage Solutions, we help you weigh your options based on your contract type, income stability, and future plans. Whether you prefer the peace of mind of fixed rates or the potential savings of variable rates, we’ll guide you to the right decision.

Talk to Us Today
Need help deciding between fixed or variable? Let our contractor mortgage specialists provide personalised advice so you can move forward with confidence.