Here are the different types of mortgages explained…

What is a Fixed Rate Mortgage?

This type of mortgage is great for people who want to play it safe. The mortgage will be set at a fixed rate for X amount of years, then it will usually transfer to a variable mortgage. Your payments during the fixed period will remain the same regardless of the Bank of Englands base rate.

Standard Variable Rate Mortgage

Payments will increase or decrease with the lender’s mortgage rate. The rate will normally be driven by the Bank of England base rate. The loan is variable and you can expect the interest to rise and fall. There are also no early repayment charges and you can switch mortgage without being charged.

Discounted Rate Mortgage

You will recieve a set mortgage rate for a period of time. The lender will normally set a good deal for this. Once the period is over, you will usually transfer to a variable mortgage. This deal will be great for first time buyers because of the early deals. The rates can go up drastically after this, so this type of mortgage must be entered with caution!

Tracker Mortgage Explained

Tracker mortgages will rise and fall with the Bank of Englands base rate. In the current ‘credit crunch’ climate, people will benefit from a tracker mortgage. Just beware of rising interest rates! There are early settlement charges.