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Please note that the summaries below are for guidance only. For a full explanation of mortgage interest rates, and which would be most appropriate to your circumstances, please call us now on 020 7519 4900 or fill out our get a quote form.
Fixed
The rate is static for a set period of time, either a number of years or to a specific date. Once this period has ended, the rate goes back to the lender’s variable rate. Even though you can usually choose the length of the fixed period, the selection will be limited to current offers. There are often early repayment charges on these rates if you wish to repay the loan before the fixed rate is up and, occasionally, for a short time after.
Tracker rates
A variable rate loan where the interest rate is a set amount above or below the Bank of England or some other base rate and so always ‘tracks’ changes in that rate.
Variable
Usually known as the standard variable rate (SVR). This rate normally fluctuates in line with the Bank of England interest rate.
Discounted
This is a variable rate but set at a fixed percentage below the lender’s standard variable rate. If you wish to pay back your loan before the end of the discounted rate, you may have to pay a charge known as a early repayment charge. In some cases these charges apply for a short time after the discount rate has ended.
"Cap & Collar"
These rates limit your payments to variations between a minimum (collar) and maximum (cap) rate for a set period of time.
Cashback Incentive
As another ”Special offer“, companies sometimes offer cashback as another incentive to use their products. With cashback the lender will give you a sum of money on completion of the mortgage. For this type of offer, you are usually restricted to the standard variable rate for a set period, and have to repay some or all the cashback if you wish to redeem your loan sooner