Mortgage deals have different options with many types of interest rate deal; each with different pros and cons. The suitability of an option depends on your individual circumstances. You will find a list of the various mortgage interest rates deals below:

Standard variable rate: Your payments move up or down at the lender’s discretion. The lender may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down. Usually, there are no early repayment charges, but check and see.


With the above option, usually you can leave your lender without any penalties or problems. Also, you are in control. You can usually pay back extra amounts (and cut your interest costs) without a penalty. It moves with interest rates. So if the lender decides to increase the rate your monthly payments will increase. It may be expensive compared to other deals. The lender may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down.

Tracker rate: It is a variable rate loan with an interest rate that’s equal to or a set amount above or below the Bank of England or some other base rate. It tracks (moves up or down with) that rate. You may have to pay early repayment charges sometimes during any special deal period and maybe even after the period too.

The tracker rate option is useful if you can afford to pay more when interest rates go up, in exchange for benefiting when they go down. It is not a good choice if your budget will not stretch to higher monthly payments.

Discounted interest rate: With this option your monthly payments can go up or down, but you get a discount on the lender’s standard variable rate for a set period of time. At the end of the deal, you usually change over to the full standard variable rate. You will almost always have to pay early repayment charges during the special deal. They can apply even after the end of the special deal period as well.


With this option you get a smoother start to your mortgage, at a time when money may well be tight. But you must be confident you can afford the payments when the discount ends. The discount period is limited, so don’t get used to those early low repayments. You may not be able to make overpayments and pay off the loan early without penalties. The lender may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down.

Fixed interest rate: With this option your payments are set at a certain level for an agreed period. At the end of that period, they will usually switch you to the standard variable rate. You will have to pay early repayment charges during the special deal period. They can apply even after the special deal period, too.

With the fixed interest rate option, your payments will stay the same in that period, even if interest rates go up. This gives you the security of knowing that you can afford your payments and will make it easier for you to budget. At the same time, if rates go down, you will not benefit. Your payments will stay at the higher rate. You may not be able to make overpayments and pay off the loan early without penalties.