What are mortgage rates?
Mortgage rates are the interest rate you’ll be offered as part of your mortgage deal. Lots of things can affect which mortgage rate you are offered:
- Your personal circumstances
- Type of mortgage you’re looking for
- National base rate
Here’s how the mortgage rate is set for five common mortgage policies.
Fixed Rate Mortgage
As the name suggests, the mortgage rate for fixed mortgages stays the same for a set time period.
This is usually between one to five years. It means you pay the same percentage of interest on your monthly repayments during that time.
Variable Rate Mortgage
The interest rate on a variable rate mortgage can change during your policy. It means your payments can go higher or lower each month. These are not linked directly to the base rate, but can be influenced by changes to it.
Tracker mortgage
A tracker mortgage is a type of variable rate mortgage that is linked directly to the Bank of England base rate. As the base rate rises or lowers, so do your repayments.
Capped mortgage
Capped mortgages have a set limit on the mortgage rate applied to your deal. This means your repayments won’t go over a certain amount each month. Your rates could also drop if interest rates drop, so you’ll pay less.
Offset mortgage
The rates for offset mortgages can be either fixed or variable. The mortgage is linked directly to your savings, which are used to reduce the amount of interest paid on your mortgage.
Use our mortgage interest rate change calculator to work out how much your monthly payments could be if your interest rate changes.