Types of Interest Rates:

There are many different types of rates available, to suit many different situations / lifestyle requirements. These are some of the most popular rates explained. Click on the type for more of an explanation:

Fixed     |     Capped     |     Variable (Standard)     |     Discount     |     Tracker

A fixed rate loan gives you a guaranteed rate of interest for an agreed period of time

This can be very comforting if you have a large loan or a tight budget, because it guarantees the payments will not rise. But if interest rates fall, your mortgage payments will stay the same until the end of the fixed term, so you should think carefully about how long you want to be locked into the same rate. Most of the larger lenders will have several deals available , offering fixed of anything from 1 to 10 years, or even longer.

When the period ends, the mortgage usually reverts to the lender's standard variable rate. Some lenders will guarantee to offer another fixed rate option, usually for an arrangement fee, but can't say beforehand what the new rate will be.

Fixed rate mortgages often have financial penalties if you want to switch to a different type of loan or repay your mortgage during the fixed term. It's important to check whether you can transfer the deal and the rate to a new property if you move. Lenders usually limit any transfer to the amount you still owe on the original mortgage, so you may have to pay more for taking out an extra loan.