What types of mortgage deals are there? Pretty much all mortgages are either classified as repayment mortgages, where you pay back a bit of the loan and a bit of interest each month, or interest-only mortgages, where you just pay interest each month then pay back the sum you originally borrowed at the end of the mortgage term. It is occasionally possible to be on a part-repayment, part-interest-only basis but this is very rare. Within those two categories of mortgage, there are several different types of deal you can choose from.
Mortgages
Mortgages
Need any help?
01795 700701
Monday – Friday: 9:00am – 5:00pm
Fixed Rate Mortgage
A fixed-rate mortgage is a mortgage where your interest rate is guaranteed to stay the same for a set period of time. This can offer peace of mind because, unlike a variable-rate mortgage (such as a tracker), you’ll know exactly how much you’ll need to repay each month during this period.
Tracker Mortgage
A tracker mortgage is a home loan where the interest rate you pay is based on an external rate – usually the Bank of England base rate – plus a set percentage. The base rate is currently 0.75%. So, if the interest rate on a tracker mortgage was the base rate +1%, the amount of interest you would pay is 1.75%. If the base rate went up, the interest rate on your tracker mortgage would also rise.
Variable Rate Mortgage:
A standard variable rate is a type of variable-rate mortgage, meaning the total amount that you pay could change each month. A standard variable rate mortgage is what you’ll be transferred onto when a fixed, tracker or discount deal comes to an end.
