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Types Of Interest Rates

There are many different types of mortgage products available to suit everybody’s needs. Below is listed the main types of mortgage products:

Standard Variable Rate

The interest rate varies throughout the term of the mortgage and is set by the mortgage lender

Discounted Rate Mortgage

The interest rate is discounted below the mortgage lenders Standard Variable rate, reducing your monthly payments for a certain period. The discount is guaranteed, but the rate may vary. After the discounted period the interest rate will revert to the lenders Standard Variable rate.

Fixed Rate Mortgage

Interest rate is fixed for a specific period of time. During the fixed rate period your monthly repayments will remain the same. At the end of the fixed rate period the interest rate will normally revert to the lenders Standard Variable rate

Tracker Mortgage

The interest rate varies throughout the term of the mortgage. The interest rate tracks the Bank of England base rate so when the Bank of England base rate falls, your monthly mortgage repayments fall. If the rate rises, so will your monthly mortgage payments

Stepped Discounted/Tracker Mortgage

The interest rate varies throughout the term of the mortgage. The interest rate tracks the lenders Standard Variable rate or the Bank of England base rate +/- a set percentage for a certain period of time. When the Standard Variable rate or the Bank of England base rate falls, your monthly mortgage repayments fall. If the rate increases so will your monthly mortgage payments. After the initial tracker period the amount of the tracker difference will change for another set period. At the end of the product term the interest rate will normally revert back to the lenders Standard Variable rate.

Capped/Collared Rate Mortgage

These rates limit your payments to variations between a minimum and/or maximum rate for a set period of time. Therefore giving you the benefits of lower monthly payments if rates decrease and the peace of mind and security of knowing how much the maximum payment would be if rates increase. Once the capped/collared rate period ends the interest rate will normally revert to the lenders Standard Variable rate.