Modern mortgage rates

TRACKER RATES - These rates operate in a similar way to a discounted rate, but they track the bank base rate rather than the mortgage base rate. They are usually a certain percentage above the bank base rate for a period of time but bear in mind that the bank rate is lower than the mortgage rate. Often tracker rates are very flexible allowing for overpayments of the mortgage without penalty. Some lenders will allow payment holidays where you can request to miss payments for a certain length of time but normally there are restrictions on the length of time you can miss payments, the minimum time the mortgage has been running for and often you will have had to make overpayments previously to qualify.

FLEXIBLE MORTGAGES - They are what they say, allowing extra payments to be made to reduce the loan outstanding or build up a reserve of money you can draw on in the future or use to suspend payments for a period of time. Most of these rates have no tie in period either which means that you can change mortgage providers at any time or repay the whole loan without being charged a penalty.

OFF SET MORTGAGES - This is a fairly recent concept in that you can use your savings to offset your mortgage interest payments in other words you do not earn any interest on your savings but likewise you do not pay interest on the part of the mortgage that is equal to your savings. For example if your mortgage was £100,000 and you had savings of £20,000 the lender would only charge you interest on £80,000. The big advantage is that the savings still belong to you as you haven't actually paid the money off your mortgage. These deals are usually offered with a small discount which is often for the lifetime of the mortgage but they are very rarely available on a fixed rate deal. This means that there is little security or stability if rates increase.