Mortgage Rates

Mortgage interest rate is the most important element of your mortgage deal. The interest rate determines how much interest you will have to pay back over term of the mortgage. We have combined a guide below for a different mortgage rate available in the market.

Fixed Rate

Fixed rates are self explanatory in their own right. It means that a fixed rate is payable for a set period of time. This scheme shelters from increasing rates and allows for easy monthly budgeting. Also there will be almost certainly early repayment charges attached to the mortgage deal. If rates fall sharply during the fixed period you will be left paying relatively high rate.

Variable Rate

The Bank of England base rate affects the variable rate over time.

For example, the lender may choose to have a variable rate of 2%. This simply means that your mortgage interest rates may follow the pattern of the Bank of England’s current figures, plus the additional 2%.

Discounted Variable Rate

Lenders often come up with discounted variable rates. The lender will offer a reduced rate for a certain period of time. This means that the repayments will be lower initially, depending on the discount. When the discount period expires the interest will revert to the lender’s normal variable rate.

There are usually early redemption or repayment charges due to the discounted period.

Tracker Rate

Tracker rate mortgage is quite similar to discounted rate except that this is linked directly to the Bank of England Base Rate and will move in line with the market.

Early repayment charges are also generally payable. It is usually more flexible for overpayments than a traditional discounted or fixed rate.

Offset Mortgages

Offset mortgage is ideal for mortgage borrowers who wish to utilise their savings more tax efficiently. Also it is designed for people who wish to overpay with regular lump sums but may require access to that money later. Rates are generally trackers without early repayment charges. The rate is often linked to the base rate for the whole term of the mortgage.