Mortgage types guide

A quick overview of the different types of mortgages available, to help you decide which one is best for you.

What is a fixed rate mortgage?

The interest rate on a fixed rate mortgage is guaranteed to stay the same during the initial fixed term. Once the fixed period is over, you will switch to our Follow-on Rate which is made up of Bank of England Base Rate plus a margin. This means that after the initial fixed term your monthly repayment will increase. Fees will be payable to arrange a fixed rate mortgage and additional fees may also apply, which we can explain to you.

What is a tracker rate mortgage?

A tracker rate mortgage is linked to the Bank of England Base Rate. As the rate is linked to a variable rate your monthly repayments may increase or decrease in line with the Bank of England Base Rate movements. There are no early repayment charges on this type of mortgage. Fees may be payable to arrange a tracker rate mortgage.

What is a part and part mortgage?

A part and part mortgage enables you to split your loan across both a tracker and fixed rate mortgage.

Part of your mortgage has a fixed interest rate, and part has a tracker interest rate. If the Bank of England base rate changes the payment on the fixed part of the mortgage will stay the same and the payment on the tracker part of the mortgage will change in conjunction with the change to the base rate. Fees may be payable to arrange a part and part mortgage.

What is a follow-on rate?

On both fixed and tracker products, there is an initial period of a defined rate, called the product term. At the end of this period your mortgage reverts to a follow-on rate. This follow-on rate is made up of a margin plus Bank of England base rate. The follow-on rate is variable and repayments will increase or decrease in line with changes to the Bank of England Base Rate.

Fixed rate versus tracker rate mortgages

Fixed rate mortgage payments do not change when the Bank of England Base Rate goes up or down during the initial fixed period. Charges also apply when making early repayments. Fees may be payable to arrange a fixed rate mortgage.

Tracker rate mortgage payments increase or decrease when the Bank of England Base rate increases or decreases. There are no charges when making early repayments. Fees may be payable to arrange a tracker rate mortgage.

Choosing a mortgage

When selecting a mortgage consider:

• Do you want to pay exactly the same amount each month during your initial product term?
• Do you want to be able to make fee-free overpayments?

Please note

Your home may be repossessed if you do not keep up repayments on your mortgage.
Your investment property may be repossessed or a receiver of rent appointed if you do not keep up payments on your mortgage.

Remember that where the mortgage is denominated in a currency other than your home currency, changes in the exchange rate may increase the equivalent value of the debt in terms of your home currency.