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A standard variable rate mortgage is the lender’s basic mortgage and has no limited-term deals or discounts.

With a standard variable rate mortgage, the interest rate goes up and down during the lifetime of the mortgage. The interest rate is determined mainly by the economy and changes to the Bank of England’s base rate. This means the amount you must pay increases when the interest rate increases. When the interest rate falls, your payments decrease.

When interest rates change, depending on the lender, some immediately reflect the amount they charge to borrowers, whilst others wait until the end of their financial year before making the changes.

Some lenders offer a way of levelling out interest changes over the year so that your interest rate changes only once a year rather than reflecting each change as it happens.

Most of the larger lenders will have several deals available offering fixed rates usually lasting from two to five years but can be much longer.

One of the benefits of a fixed-rate mortgage deal is the peace of mind it gives you. It can be very comforting to know that your mortgage repayments will not rise for a fixed term, whatever happens to your mortgage lender’s standard variable rate or the Bank of England’s base rate, allowing you to plan and budget more efficiently.

Conversely, if interest rates fall, your repayments will remain the same until the end of the fixed term, so you need to think carefully about how long you wish to stay locked into the same rate.

It is also worth checking whether the fixed-term deal is transferable to another property if you decide to move during the fixed term. Equally, consider if there are early repayment charges if you pulled out of the fixed-rate deal before the end of the period.

Tracker mortgages are a type of variable rate mortgage. What makes them different is that they tend to follow the Bank of England base rate, with the interest rate being fixed at a certain percentage above or below this rate. For instance, if your tracker mortgage is the Base Rate +2%, and the Base Rate is 1.25%, you would be paying 3.25%.

Tracker mortgage deals can last for as little as one year or the entire mortgage term. If you want to leave a tracker mortgage before the end of the term, you will likely incur early repayment charges.

With a capped-rate mortgage, your interest rate goes up and down. However, you have the security of knowing that your payment will not go over a certain amount when the rate increases. This is known as a ‘capped rate’ mortgage. In some instances, there is also a minimum level under which the rate cannot fall below.

There is often an early repayment charge with capped rate mortgages should you decide to repay early or switch to another type of mortgage.

Some lenders offer their standard variable rate mortgage (SVR) but with a discount on the interest rate. This applies for a limited period agreed upon at the beginning of the contract, and once this period has ended, the mortgage reverts to the standard variable rate.

Discounted rate mortgages often incur an early repayment charge should you wish to repay before the end of the mortgage term.