For landlords reviewing a buy-to-let mortgage or remortgage, one of the biggest decisions is whether to choose a fixed rate or a tracker mortgage.
It is not always a simple choice.
A fixed rate may offer certainty. A tracker may offer flexibility. One may look more attractive today, while the other may prove more suitable depending on what happens to interest rates, the landlord’s cash flow, the property’s performance and the landlord’s wider plans.
For many landlords, the decision is not simply about trying to predict where rates will go next. It is about choosing a mortgage structure that fits their circumstances, protects their rental business and supports their plans over the next few years.
At NetRent, we have worked with landlords for almost 23 years. We understand that landlords need more than a basic rate comparison. They need to consider cash flow, lender criteria, rental stress testing, product fees, early repayment charges, future purchases, refinancing plans and the overall direction of their rental property business.
That is why the fixed rate versus tracker decision needs to be looked at carefully.
Why Fixed Rates Appeal to Landlords
A fixed rate mortgage gives landlords certainty for a set period.
The main benefit is that the monthly payment is known in advance. Whether the fixed period is two years, five years or another term, the landlord knows what the mortgage payment will be during that period, provided the mortgage terms are maintained.
For landlords, that certainty can be valuable.
Rental property is a business. Landlords need to understand income, costs and cash flow. If the mortgage payment is fixed, it becomes easier to plan around rent, repairs, insurance, service charges, tax pressure, licensing costs and other property expenses.
A fixed rate can also provide reassurance in uncertain markets. If rates rise after the mortgage is arranged, the landlord is protected from those increases during the fixed period.
That can be particularly important for landlords with more than one property. If several mortgages are affected by rate changes at the same time, cash flow pressure can build quickly. Fixing some or all mortgage payments may help create stability across the rental business.
The Possible Downsides of a Fixed Rate
The main downside of a fixed rate is that the landlord may be tied in for the fixed period.
Fixed rate products often include early repayment charges. These can become important if the landlord wants to sell, refinance, restructure borrowing, release equity or move to a different product before the fixed period ends.
For example, a landlord may choose a five-year fixed rate for certainty, but later decide to sell the property, raise capital for another purchase or restructure the way the property is financed. If the mortgage has significant early repayment charges, that flexibility may be limited or expensive.
There is also the risk that interest rates may fall after the landlord has fixed. In that situation, the landlord may not benefit from lower rates until the fixed period ends, unless switching is possible and financially worthwhile.
This does not mean fixed rates should be avoided. For many landlords, the certainty can be worth it. But the decision should be made with future plans in mind.
Why Tracker Mortgages May Appeal
A tracker mortgage usually follows a reference rate, such as the Bank of England base rate, plus a set margin.
This means the payment can move up or down. If the rate being tracked falls, the landlord’s mortgage payment may reduce. If it rises, the payment may increase.
For landlords who believe rates may fall, or who want more flexibility, a tracker can be attractive. Some tracker products may also have lower or more flexible early repayment charges, although this depends on the product and lender.
This can be useful where a landlord is unsure about their future plans.
For example, a landlord may be thinking about selling the property, carrying out works, refinancing again, transferring ownership structure or using equity for another purchase. In those circumstances, flexibility may be valuable.
A tracker may also appeal to landlords who do not want to lock into a fixed rate while the market is unsettled.
The Risks of Tracker Mortgages
The main risk of a tracker mortgage is uncertainty.
If the tracked rate rises, the landlord’s monthly payment can rise too. That can affect cash flow quickly, particularly where rental margins are already tight.
This is why landlords considering a tracker need to think carefully about affordability. It is not enough to ask whether the payment works today. Landlords also need to ask whether the property could still cope if payments increased.
Could the rent still cover the mortgage and other costs?
Is there enough cash flow to absorb a rise?
Are there reserves available?
Would a higher payment put pressure on the wider rental business?
Would other mortgages be affected at the same time?
For landlords with several properties, this becomes even more important. A tracker may provide flexibility, but it can also create uncertainty across monthly cash flow.
A tracker mortgage may be suitable for some landlords, but it needs to be considered realistically.
The Decision Depends on Your Wider Plans
The right choice depends on what the landlord wants to achieve.
A landlord who wants stability and predictable monthly payments may prefer a fixed rate. A landlord who wants flexibility and may refinance or sell within a shorter period may want to explore tracker options. A landlord who is planning to buy again may need to consider how the current mortgage decision affects cash flow, equity and borrowing capacity.
The property itself also matters.
A property with strong rental income and a comfortable margin may give the landlord more flexibility. A property with tighter rent cover may make payment certainty more important. A landlord with high equity may have different options from a landlord borrowing at a higher loan-to-value.
This is why there is no single answer that applies to every landlord.
The best mortgage structure should reflect the landlord’s cash flow, plans, risk appetite, property type, loan-to-value and future intentions.
Rates Are Important, but So Are Fees and Criteria
When comparing fixed rates and tracker mortgages, landlords also need to look beyond the rate.
Product fees, arrangement fees, valuation costs, legal costs and early repayment charges can all affect the true cost of the mortgage. A product with a lower rate may not necessarily be the best value if the fees are high or the terms do not fit the landlord’s plans.
Lender criteria also matter.
Some lenders may be stronger for certain property types. Others may apply different rental stress testing calculations. Some may be more suitable for limited company borrowing. Others may be more flexible depending on the landlord’s circumstances.
A fixed rate with one lender and a tracker with another may not be directly comparable unless the full picture is reviewed.
This is where specialist landlord mortgage support becomes important.
Why Timing Matters
Landlords should start reviewing their mortgage options 3 to 6 months before their current deal ends.
This gives time to compare fixed and tracker products properly, check rental stress testing, review the property value, gather documents and consider how the mortgage decision fits the wider landlord strategy.
Leaving the decision too late can reduce choice. A landlord under pressure may accept the quickest option rather than the most suitable one.
Starting early gives landlords more control.
It also means there is time to consider what happens if rates move, whether a product can be secured in advance, whether a product transfer is worth comparing and whether a full remortgage may provide a better route.
Speak to NetRent Before Choosing Your Next Mortgage
At NetRent, we understand that the fixed rate versus tracker decision is about more than trying to guess future interest rates.
It is about protecting cash flow, managing risk, keeping options open and choosing a mortgage route that supports your rental property plans.
Whether you are remortgaging one property, reviewing several mortgages, considering another purchase or trying to protect income in a changing market, speak to NetRent early.
If your current mortgage deal ends in the next 3 to 6 months, now is the time to review your options.
Call NetRent today on 01352 721300
Email: mortgages@netrent.co.uk
A fixed rate may give certainty. A tracker may give flexibility. The right choice depends on your property, your plans and your wider landlord position.
Disclaimer
NetRent does not provide legal advice. This article represents our general understanding of the landlord mortgage and rental property market and is provided for information only.