Important Information - mortgage types

Variable rate
The interest rate on a variable rate mortgage will change during the term of your mortgage, mainly following any changes to the Bank of England base rate. This is attractive if you want to keep your mortgage straight forward, however, you need to be sure that you will be able to afford any potential increases to your mortgage payments in the future.

Tracker rate
A tracker rate mortgage usually gives you a lower monthly payment than you would have with a variable rate mortgage. The interest rate that will apply to your mortgage is linked to the Bank of England base rate for a specified period ie. BofE rate minus 0.5% for two years. Therefore should the Bank of England base rate rise or fall your interest rate will rise or fall accordingly. As with a variable rate mortgage you need to be sure that you will be able to afford any potential increases to your mortgage payments in the future.

Discounted rate
A discounted rate mortgage also gives a lower monthly payment than you would have with a variable rate mortgage. The lender will offer a discount off their standard variable rate for a specified period ie. 2% discount for 2 years. Therefore should the lender alter their standard variable rate then your rate will alter accordingly. As with a variable rate or tracker rate mortgage you need to be sure that you will be able to afford any potential increases to your mortgage payments in the future.

Fixed rate
A fixed rate mortgage gives you a guaranteed rate of interest for a specified period of time regardless of whether the Bank of England base rate or your lenders standard variable rate changes ie. 4.5% fixed for two years. This can be very appealing if you have a larger mortgage or a tight budget, because it guarantees that your monthly payments won’t change during the specified period.

Capped rate
A capped rate mortgage gives you a guarantee that the rate you are charged will not rise above a certain level for a specified period of time ie. 6% capped for 2 years. If interest