As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.

Standard Variable Rate

The interest rate used here is the lender's standard variable rate, or SVR (SVR). As the name implies, the interest rate can fluctuate at any time, which means your monthly payments could change as well.

There is normally no early repayment charge with this form of contract, so you can switch to a different sort of mortgage at any moment and perhaps overpay your mortgage to pay it off faster and reduce the term. Variable rate mortgages, on the other hand, may fluctuate if the Bank of England base rate rises or falls, making it more difficult to budget for your payments. In many cases, there are better and more cost-effective options available on the market.

Tracker Rate

A tracker mortgage is a form of variable rate mortgage that follows a predetermined interest rate, typically the Bank of England base rate. The interest rate you pay on your mortgage will be a fixed rate above or below the rate tracked. If the rate you're tracking rises, your mortgage rate will rise by the same amount. And it will decrease when the rate being tracked decreases.

Discount Rate

A discount rate mortgage is a sort of variable rate mortgage in which the interest rate is set at a lower rate than the lender's Standard Variable Rate (SVR) for a defined period of time, usually two or three years.

The obvious advantage is that the rate is lower, resulting in reduced repayments. However, if interest rates rise, your repayments will likely rise as well. You should also be aware that lenders' SVRs vary, so you may require assistance in determining which discount programme is the most appropriate and cost-effective for you.

Capped Rate

A variable rate mortgage with an interest rate ceiling, or cap, above which your payments will not climb. The interest rate is typically greater than other variable and fixed rate mortgages, and the ceiling can be set extremely high. It does, however, guarantee that your payments will not exceed a particular threshold.

In most cases, a capped rate is only available for a limited time, usually between two and five years.

This form of mortgage may also have a minimum interest rate that the lender will charge for a set length of time. A 'collar' is the term for this.