A fixed interest rate Mortgage is a loan where the interest rate doesn't fluctuate during the fixed rate period of the Mortgage. This allows the borrower to accurately predict their future payments and budget accordingly with the security that the monthly payments will not change for a chosen period of time, typically 2, 3 or 5 years.
Tracker mortgages move directly in line with another interest rate – normally the Bank of England’s base rate plus a few percent.
So if the base rate goes up by 0.5%, your rate will go up by the same amount.
Usually they have a short life, typically two to five years, though some lenders offer trackers which last for the life of your mortgage or until you switch to another deal.
This is a discount off the lender’s standard variable rate (SVR) and only applies for a certain length of time, typically two or three years.
But it pays to have Mortgage Chain look at different lenders for you. SVRs differ across lenders, so don’t assume that the bigger the discount, the lower the interest rate.
These work by linking your savings and current account to your mortgage so that you only pay interest on the difference.
You still repay your mortgage every month as usual, but your savings act as an overpayment which helps to clear your mortgage early.
A flexible mortgage is one that gives you the ability to overpay by any amount, draw down on overpayments and repay your mortgage loan at any given time without penalty. Hence the name. This can be very useful if you are looking to move quickly or rem-mortgage again following home improvements. Flexible mortgages will either track the lenders standard variable rate (SVR) or the Bank of England Base rate. See our Mortgage Glossary (Link below) to understand all the mentioned terms.