Mortgages Rates - Which Is Best For You?

By Marcus Henry

One of the key decisions in choosing a mortgage deal is which type of interest rate will best suit your needs. With several different rate types available the one you select can have a really impact on how your mortgage works.

This guide reviews the most common rate types, weighing up the pros and cons of each to help you make a more informed decision when searching for a mortgage.

Fixed Rate Mortgages

With a fixed rate mortgage deal the interest rate you pay will be guaranteed for a set period of time at the end of which the mortgage will usually revert to a variable or tracker rate. A fixed rate provides greater certainty when budgeting your monthly expenditure

Discount Rate Mortgages

This form of mortgage offers a rate that is lower than the variable rate for a guaranteed period of time. Unlike fixed rate products the interest rate of a discount mortgage is changeable and will go up and down with changes in the base rate. This type of mortgage is suitable people looking for a lower interest rate who can afford the possibility of interest rates increasing

Capped Rate Mortgages

With a capped rate mortgage there is a limit as to how high the interest rate you are charged can go. The rate you pay can go down if the base rate of interest is reduced. A capped rate mortgage is appropriate if you want some certainty in how high your repayments could be but also want to benefit from any possible reductions in interest rates made by the Bank of England.

Tracker Rate Mortgages

With this type of mortgage the rate you pay is variable; any change, be it a rise or fall, in the base rate of interest will be mirrored in the rate charged on your mortgage. With a tracker rate mortgage it is important to remember that while your repayments will be lower if interest rates falls they will also increase if rates go up. Make sure you can afford the possible fluctuation in payments before taking out a tracker mortgage.

Variable Rate Mortgages

When any promotional rate, fixed, discount, tracker etc has expired your mortgage will automatically revert to the lenders standard variable rate or SVR. These mortgages charge high interest rates and are very uncompetitive. If you are currently paying the SVR you should take the time to compare UK mortgages as you will find many deals that could help reduce your repayments and save you money.

Hopefully the above information will give you a better idea of what the different types of interest rates mean and help you decide which would best suit your personal circumstances. Mortgages can be very expensive if you stay on a high interest rate for too long so use [http://www.webcomparison.co.uk/]web comparison sites and seek expert advice from an independent financial advisor to find the best mortgage for you.

Visit http://www.webcomparison.co.uk to learn more about finding the best mortgage deals and how to [http://www.webcomparison.co.uk/mortgages/]compare UK mortgages online.

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