The SVR is the lenders standard variable rate, usually 2-4% above Bank of England base rate. With a variable rate mortgage you are able to switch lenders at any time without being penalised. If you start a mortgage with a different type of interest repayment for an agreed term, once the term finishes you will go back to the lender’s SVR.

Fixed Rate

 
A fixed rate mortgage allows you to repay interest at a fixed rate, irrespective of any base rate fluctuations. In other words, your monthly repayments will remain the same every month for a prior-agreed period of time, usually between 1 and 25 years (2 - 5 years being the norm). Fixed rate mortgages often have high redemption penalties so you need to be sure this is suitable for you for at least the term of the ‘fix’. Furthermore, the lender may also charge a ‘booking fee’ to apply for this type of mortgage.

Tracker

 
A tracker mortgage will mirror any movement in the Bank of England Base rate, so you will benefit from any falls in interest rates, but you’ll also have to pay more each month should the rates increase.

Discount

 
The discount mortgage rate is another variation of the standard variable rate. It provides a discount from the lender’s SVR for a fixed period of time. The interest rate still fluctuates, meaning your monthly repayments may differ slightly from month to month, but the discount remains constant.