Types of mortgage available

Why mortgage type matters

Choosing a mortgage isn’t only about the interest rate. The type of mortgage can affect how your interest rate—and therefore your monthly payments—may change over time.

Different mortgage types can suit different priorities, such as:

• Budget certainty (knowing what your payments are likely to be)
• Flexibility (being able to benefit if rates fall)
• Protection (limiting how high your rate could go)
• Short-term planning (using a deal period to fit a specific plan)

Below is an overview of the most common mortgage types available in the UK.

Fixed rate mortgage

With a fixed rate mortgage, the interest rate you pay stays the same for a set period (for example, 2, 3, 5 years, or longer depending on the deal).

What this means in practice

• Your monthly repayments remain the same during the fixed period.
• You’re typically protected from changes in the lender’s standard rates during that time.

Potential fit

• Borrowers who want predictable payments.
• People planning around a known timeframe (such as a move or life change) and prefer stability.

Variable rate mortgage

A variable rate mortgage is one where the interest rate can change during the term.

Because the rate can move, your repayments could increase or decrease depending on how the lender sets its variable rates.

Standard Variable Rate (SVR)

An SVR mortgage uses the lender’s standard variable rate. This is the lender’s default variable rate, and it can change at any time.

Potential fit

• Borrowers who are comfortable with payment uncertainty.
• Those who may not need the mortgage to be stable for a long period.

Tracker mortgage

A tracker mortgage is a type of variable rate mortgage where the interest rate is linked to an external reference rate—commonly the Bank of England base rate—plus or minus a set margin.

What this means in practice

• When the reference rate moves, your mortgage rate usually moves too.
• Your repayments can therefore change in line with the underlying benchmark.

Potential fit

• Borrowers who want their mortgage rate to move with the market.
• People who are comfortable with the possibility of payments rising if base rate increases.

Discount mortgage

A discount mortgage is a variable rate mortgage where the interest rate is set at a discount below the lender’s SVR for a fixed period.

What this means in practice

• During the discount period, you pay a rate that is lower than the lender’s SVR.
• After the discount period ends, the mortgage typically reverts to the lender’s SVR (or another variable arrangement, depending on the deal).

Potential fit

• Borrowers who want a lower rate for a defined period.
• People who are comfortable that the rate may change once the discount ends.

Capped-rate mortgage

With a capped-rate mortgage, the interest rate moves with the lender’s SVR, but there is a cap—meaning the rate won’t rise above a certain level.

What this means in practice

• Your rate can still change, but the cap provides an upper limit.
• If the SVR falls, you may still benefit from lower rates (depending on how the deal is structured).

Potential fit

• Borrowers who want some protection against rate rises.
• Those who are comfortable with variability, but want a ceiling on how high costs could go.

How lenders package mortgages for different buyers

Alongside the mortgage type (fixed, variable, tracker, discount, capped), lenders also offer products designed for different stages of the housing journey.

For example, some mortgages are structured with particular borrower circumstances in mind, such as:

• First-time buyers
• Home movers
• Buy-to-let scenarios
• Borrowers looking to release equity from an existing property

The mortgage type you choose may interact with the wider product features available from lenders, so it’s important to consider the full deal—not just the headline label.

Key points to consider when comparing mortgage types

When reviewing mortgage options, it helps to focus on how the deal behaves over time:

• How long the rate is fixed or discounted for (if applicable)
• Whether the rate is linked to a benchmark (tracker) or the lender’s own pricing (SVR)
• Whether there are caps or limits on rate changes
• How changes could affect monthly affordability after the initial period

Understanding the mortgage type can make it easier to match a product to your priorities—whether that’s stability, flexibility, or protection from certain rate movements.