The main types
How each one behaves
The right choice depends on how much certainty you need, how long you expect to stay, and whether you have savings you want to keep access to.
| Type | What happens to your payment | Tends to suit |
|---|---|---|
| Fixed rate | Locked for a set period, usually two, three or five years | Anyone who needs to budget with certainty |
| Tracker | Follows the Bank of England base rate plus a set margin | People who can absorb a rise and think rates will fall |
| Discount | A discount off the lender's own standard variable rate | Short-term flexibility, often with lower exit costs |
| Standard variable | Set by the lender and can change at any time | Almost nobody by choice, it is where deals expire to |
| Offset | Savings sit against the balance and cut the interest charged | People with meaningful savings who want to keep access |
| Cashback | A lump sum paid on completion, usually with a higher rate | Buyers who need cash at completion more than the lowest rate |
Worth understanding
The details that catch people out
Early repayment charges. Most fixed and discounted deals charge you to leave early, often a percentage of the balance that reduces each year. If there is any chance you will move or repay early, this matters more than a small difference in rate.
Product fees. A lower rate with a £1,499 fee is not always cheaper than a higher rate with no fee. On a smaller loan it usually is not. We compare the total cost over the deal period rather than the headline rate.
Repayment or interest only. On repayment you clear the balance by the end of the term. On interest only your payments are lower but the full balance is still owed at the end, and you need a credible plan to repay it.
Overpayment allowances. Most deals let you overpay up to 10% of the balance each year without penalty. Some are more generous. If you expect bonuses, this is worth checking.
Your home may be repossessed if you do not keep up repayments on your mortgage.