Fixed Interest Rate – An interest rate which does not change during the term of the mortgage. This means that if the interest rates increase, your payments will stay the same. Similarly, if they drop, your payments will be the same, so you could end up paying more than required. However, with this type of interest rate, you have the security of knowing that your payments will be the same every month.

Variable Rate – This is an interest rate which can go up or down as depicted by the lender, who base their decisions of the Bank of England. This type of rate doesn’t offer you security as you don not know what your payments will be in advance.

Capped Rate – This type of rate means that the interest rate you pay can not rise above a certain agreed amount during the term of the cap. This gives you security that should rates rise, your payments will not increase above a certain amount, and if rates drop, your payments should decrease too.

Discounted Rate – This is a variable rate with a discount. So if the interest rates go up, so do your payments, however, your discount still remains for an agreed period.

Tracker – Fluctuates in line the Bank of England’s base rate. Tracker rate is similar to variable and discounted rates. If the Bank of England base rate drops and your lender delays reducing theirs, your payments will be reduced immediately.