Repayment, Tracker, Variable

Different Types of Mortgages

When it comes to buying a home, understanding the different types of mortgages available can be daunting. With a wide range of options to choose from, it can be challenging to know which one is right for you.


This is the most popular and widely-available option, where you make monthly repayments for an agreed period of time until you’ve paid back both the mortgage capital and the interest.

With a repayment mortgage, or capital repayment mortgage, to give it its full name, you pay back part of the mortgage capital and interest each month.

At the outset, most of your monthly payments will comprise of interest; over time, more of your monthly payment will be repaying the capital.

With a repayment mortgage, you are guaranteed to repay the full mortgage by the end of your mortgage term, provided you make your repayments in full each month.

Variable Rate

The interest rate used here is the lender’s default rate, their Standard Variable Rate (SVR). As the name suggests, the rate applied can change at any time, meaning that your monthly repayments could do so too.

With this type of product there isn’t usually an early repayment charge with your lender, so you can move to another type of mortgage at any time and can potentially overpay your mortgage to pay it off faster and shorten the term. However, variable rate mortgages can potentially change if the Bank of England base rate rises or falls, making it harder to budget for your repayments. There can often be better and more cost-effective deals available in the marketplace.


Tracker Mortgages

A tracker mortgage is a type of variable rate mortgage which tracks a nominated interest rate, usually the Bank of England base rate. The actual mortgage rate you pay will be at a set interest rate above or below the rate tracked.

When the rate tracked goes up, your mortgage rate will go up by the same amount. And it will come down when the rate tracked comes down.


As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.