Which mortgage is most suitable for me?

There are many types of mortgages available; the overload of information can make it difficult for you to make the right decision.

Below is a summary of the main types of mortgages available.

Fixed rate

A fixed rate mortgage gives you a special interest rate that will remain the same for a set period of time, allowing your monthly re-payments to stay the same each month.  This helps keep budgeting simple and easy. However, a fixed rate mortgage will only remain fixed for the initial period and not the entirety of the mortgage term.

Discounted rate

With a discounted rate mortgage the interest rate is reduced by a specified amount for a set period. When the lender's standard variable rate falls, so do your monthly payments. It is also possible to provide lower monthly mortgage payments at the start of the mortgage. Less easy to budget than with a fixed rate mortgage.

Variable rate

A variable rate mortgage is a type of home loan in which the interest rate is not fixed. Instead, interest payments are adjusted at a level following the Bank of England’s base rate. Lenders can offer borrowers variable rate interest over the life of a mortgage loan. Your monthly payments are variable as the base rate changes according to the current financial climate.

Tracker mortgage

Tracker mortgages are a type of variable rate mortgage. What makes them different from other variable rate mortgages is that they follow /track the movements of another rate. Most commonly, the rate that is tracked is the Bank of England base rate. As a tracker mortgage is based on a variable rate your monthly re-payments could change so, before deciding on this mortgage, it is important that you check you could still afford the re-payments.

Off set mortgage

An offset mortgage blends a traditional mortgage with one or more savings or current accounts, held by the same financial institution. The financial institution establishes an initial loan or credit limit, along with an interest rate, for any borrowed funds.  Interest is calculated on the difference between savings and the mortgage rather than the whole mortgage amount

Capped mortgage

Capped rate mortgages are a type of variable rate mortgage, but with one important difference: they have an interest rate ceiling, or cap, beyond which your payments can't rise. A capped rate is normally only for an introductory period – typically anything from two to five years.

*An arrangement fee may apply and an early repayment charge may be applied if the loan is redeemed before a specified date.