Mortgage Interest Rates

Which type of mortgage is suitable for your needs?

Fixed Rate

The rate of interest is fixed for a certain length of time - usually 1-5 years - so you'll know exactly how much you'll need to find each month to pay the mortgage for the duration.

Discount

This is a percentage discount off the lender's variable rate. So your monthly payments will move up and down in accordance with the lender's normal rate but you'll be paying at a reduced rate over the relevant time period.

Variable

The standard variable rate is linked to the Bank of England's base rate and moves up and down in line with it. It's usually between 1% and 2% higher than the base rate, is set by the lender and is generally the most expensive rate for someone with a mortgage. It's also unpredictable!

Tracker

This is very similar to the variable rate in that the rate payable will alter in line with any change to the Bank of England base rate. However, the link is more directly linked to the base rate in that it will be set at, say, '0.75% above the base rate' rather than a rate of the lender's own choosing.

Capped

With a capped rate mortgage your monthly repayments can reduce but they can't increase beyond the agreed capped rate. It means there is a ceiling to the interest rate you will pay over a given period of time.

Collared

A collared rate is the opposite of capped rate – the interest rate is variable and won't go below a certain level. Collared rates generally work along side capped or tracker mortgages.