Traditional Mortgages Rates

STANDARD VARIABLE RATE - The interest rate goes up and down during the lifetime of the mortgage depending on what happens with the bank base rate this means that if the rate goes up your payments will also increase or if rates come down so will your monthly payments. This doesn't provide you with any stability or assistance in keeping your payments within a budget but on the other hand you are not tied in either so you could move your mortgage to another lender at any time.

FIXED RATE - The interest rate remains at a fixed amount for an agreed period of time. This can be very good for budgeting purposes especially if you have a large loan or a tight budget. Your payments will remain the same if payments do increase but they will also stay the same if payments fall so you could end up out of pocket. When the fixed rate ends the rate goes to the standard variable rate and it is important to review your options again.

DISCOUNTED RATES - This type of rate offers a discount off the variable rate for a set period of time ie 2% for 3 years. This means that although the rate is lower than the variable rate it will still go up and down with any changes to the base rate. Some discounts will tie you in for the length of time of the discount and others will have no tie ins allowing for over payments or early repayment of the loan.

CASHBACK MORTGAGES - These are usually charged at the variable rate but a percentage of the loan is paid to the borrower shortly after completion. This is usually repayable if the mortgage is repaid within a certain agreed period

CAPPED RATE - This rate works in a similar fashion to the variable rate therefore payments still go up and down. It has a ceiling on the maximum rate charged so you have the security of knowing that your payments will not go higher than the ceiling but that they could go lower. This is usually for an agreed period of time and there will be penalties for early repayment.