Choosing a mortgage is not a decision to rush. With several different types available in the UK, each with its own advantages and trade-offs, understanding the options is the first step to finding the one that fits your circumstances. Here is a clear breakdown of the main types.
Fixed-rate mortgages
A fixed-rate mortgage locks your interest rate in for a set period, typically two, three, five, or ten years. During that time, your monthly payments stay exactly the same regardless of what happens to the Bank of England base rate or wider interest rates.
The main appeal is certainty. You know precisely what you are paying each month, which makes budgeting straightforward. This is particularly valuable when rates are rising or uncertain.
The trade-off is that if rates fall during your fixed period, you will not benefit. Most fixed-rate deals also come with early repayment charges, meaning there is a cost if you want to switch or pay off the mortgage before the fixed term ends.
Tracker mortgages
A tracker mortgage follows the Bank of England base rate, moving up or down in line with it, plus a set percentage on top. So if the base rate rises by 0.25%, your mortgage rate rises by the same amount.
Trackers can work well when rates are falling or stable, and they sometimes offer more flexibility than fixed deals, including fewer or no early repayment charges. The risk is that if the base rate rises sharply, your monthly payments increase accordingly, which can make budgeting harder.
Standard variable rate mortgages
The standard variable rate (SVR) is a lender’s default rate, usually applied when a fixed or tracker deal comes to an end. The lender can change it at their discretion, and SVR rates are often higher than other deal types. Most borrowers should look to remortgage before ending up on their lender’s SVR.
Discount rate mortgages
A discount mortgage offers a reduction off the lender’s SVR for a set period. Because it is linked to the SVR rather than the base rate directly, the amount you pay can still change if the lender adjusts their SVR. It can be a competitive option in the short term but carries some unpredictability.
Offset mortgages
An offset mortgage links your savings to your mortgage balance. Rather than earning interest on your savings, the balance is set against your mortgage debt, reducing the amount of interest you pay. You can either use this to lower your monthly payments or to pay your mortgage off sooner.
Offset mortgages tend to come with slightly higher interest rates than standard deals, so they work best for people with meaningful savings balances that they want to keep accessible rather than lock away.
Interest-only mortgages
With an interest-only mortgage, your monthly payments cover only the interest on the loan. The capital remains outstanding and must be repaid in full at the end of the term. Monthly payments are lower, but you need a credible strategy in place to repay the capital, and lenders apply strict eligibility criteria. This type is more commonly used for buy-to-let than for residential owner-occupied homes.
So which is best for you?
The honest answer is that it depends entirely on your personal circumstances. Your income, financial commitments, attitude to risk, how long you plan to stay in the property, and what you expect to happen to interest rates all play a role.
A mortgage adviser can compare the full market, assess what you are likely to qualify for, and recommend the most suitable option based on your specific situation. Given the size of the commitment involved, that guidance is well worth seeking.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Approved by In Partnership FRN 192638 June 2026
