By: Harley Cheetham

As one of the most popular ways to finance a home, a mortgage is a significant commitment. As such, it is essential to understand the different types of mortgage interest rates in the UK. This article, brought to you by Blossomfield Mortgages, a mortgage and protection company based in Birmingham and Lichfield, aims to explain the various types of mortgage interest rates available to you.

Fixed Rate Mortgages

Fixed rate mortgages are one of the most popular types of mortgages in the UK. As the name suggests, the interest rate on this type of mortgage remains fixed for a certain period of time, usually between two and five years. During this time, the monthly mortgage payments remain the same, regardless of any fluctuations in interest rates. This makes budgeting more manageable and provides peace of mind to homeowners, as they know exactly what they will be paying each month.
 

Variable Rate Mortgages

Variable rate mortgages, on the other hand, have an interest rate that can fluctuate at any time. This means that your monthly mortgage payments can go up or down depending on the current interest rate environment. There are several types of variable rate mortgages, including tracker mortgages and standard variable rate mortgages.

Tracker Mortgages

Tracker mortgages have an interest rate that tracks the Bank of England's base rate. The interest rate on a tracker mortgage is usually a set percentage above the base rate, which means that when the base rate goes up or down, the interest rate on the mortgage will follow suit.
 

Standard Variable Rate

Mortgages A standard variable rate mortgage is the interest rate set by the lender, which can change at any time. This type of mortgage often has a higher interest rate than fixed rate or tracker mortgages, and the monthly payments can fluctuate.
 

Discounted Rate Mortgages

Discounted rate mortgages offer a discount on the lender's standard variable rate for a certain period, usually between two and five years. The interest rate on this type of mortgage can go up or down, but it will always be a set percentage below the lender's standard variable rate.
 

Capped Rate Mortgages

Capped rate mortgages are similar to variable rate mortgages, but they come with an upper limit on the interest rate. This means that even if interest rates rise, the interest rate on the mortgage will not go above a certain level. However, capped rate mortgages often come with higher interest rates than other types of mortgages, as you are paying for the protection of an upper limit.

There are several different types of mortgage interest rates available in the UK. Each type of mortgage has its advantages and disadvantages, depending on your financial situation and risk tolerance. If you are unsure which type of mortgage is right for you, it is always best to seek professional advice from a mortgage advisor, we can help guide you through the process and find the right mortgage for your needs.