With so many options, choosing a mortgage can be daunting, whether you are a first-time buyer or a home mover.
Here, we talk to experts and look at the costs of different types of deals to help you weigh up the types of mortgage products worth considering this year.
Is 2026 the year of the tracker mortgage?
2025 was a good year for tracker mortgage holders. A borrower with a tracker mortgage taken out in January 2025 will have seen their mortgage rate drop by a full percentage point, following four cuts to the base rate. This saved the average tracker mortgage holder £439.62 during 2025, according to analysis by UK Finance.
Experts anticipate that the base rate will fall further in 2026, with most estimating one or possibly two base rate cuts. However, while tracker rates are expected to fall, they may only drop by 0.25 percentage points, which would still make them more expensive than the best fixed rates currently.
However, another perk of a tracker mortgage is the flexibility. Tracker mortgages typically don't include early repayment charges, which apply if you overpay above a certain amount or switch mortgages before the term of the deal. If you're thinking of moving in the next few years, a deal with no ERCs could save you a significant amount of money. Find out more:What's happening to fixed mortgage rates?
As of 13 January, we found 6,792 fixed-rate deals on the market, compared with just 375 trackers, so there's much more choice if you decide to fix.
And the good news is that HSBC, First Direct, Halifax, Lloyds Bank and Barclays have begun the year by cutting rates, with Barclays by as much as 0.36 percentage points.
We've found that the impact of the cuts is likely to be felt most by borrowers with smaller deposits, who have a loan-to-value (LTV) of 70% to 90%. For example, the lowest rate for first-time buyers with just a 5% deposit has dropped by 0.05 percentage points since the start of the year.
Find out more:What fixed-rate term should you pick?
The most popular fixed-rate products are typically two or five-year terms.
The three key considerations for borrowers are the cost, your attitude to risk and your future plans.
Currently, borrowers will typically find the cheapest deal with a two-year fix, with rates generally increasing the longer you fix for.
A shorter mortgage term gives you the flexibility to switch to a new deal sooner, potentially at a lower rate, but there’s always the risk that rates won’t fall, or could even rise. While a five-year fix gives greater certainty but will typically come with a slightly higher rate.
Recently, borrowers have increasingly opted for three-year terms, perhaps because they offer a little extra security, albeit at a lower rate than five-year fixes.
When choosing the term length, it's also important to consider your future plans. If you think you'll move home sooner, a shorter-term deal could be more suitable, as you'll likely face early repayment charges if you move home during your fixed term.
Find out more:How does the type of mortgage impact the monthly cost?
The mortgage product you choose can significantly affect your monthly mortgage costs.
To illustrate this, we’ve calculated the estimated monthly costs of the cheapest two-year tracker, as well as the cheapest two-year, three-year, five-year and 10-year fixed rates, at three different LTV levels, for a £250,000 mortgage over 25 years.
Two-year fixed rates were the cheapest option across all three LTVs, with them £20 to £30 cheaper than five-year fixes at the moment.
The best three-year mortgages typically cost somewhere between the price of a two-year and a five-year fix. However, at the higher LTV ratios, a five-year fix can be slightly cheaper.
Our research shows that across the three LTV ratios we analysed, long-term security comes with a cost, with the 10-year fix being the most expensive across all three LTV ratios. At 60% LTV, the best 10-year fixed rate costs more than £100 extra per month than the cheapest two-year fix.
The table also highlights the price of flexibility. We found that the best tracker mortgage is more expensive than two, three and five-year fixes across all LTV ratios we analysed.
Find out more:Should you consider a green mortgage in 2026?
If your home has an EPC rating of A or B, it may be worth considering a green mortgage, as some lenders will offer energy-efficient homes a lower interest rate. Similarly, if you would like to make green home improvements, many providers will offer 0% loans or cashback to mortgage customers.
Find out more:source https://www.which.co.uk/news/article/what-type-of-mortgage-should-you-choose-in-2026-arsaa2L5EWhs