|
Interest Rates |
How does it work |
Early repayment charges |
What does it mean for you? |
|
Standard Variable Rate (SVR) |
A variable interest rate which moves up or down with the lender's own mortgage rate, which itself is usually driven by the Bank of England (BOE) Base Rate. |
No None usually |
· Usually you can leave your lender , or make repayments without any penalty costs · Unlimited variable payments which will probably be expensive compared to other deals. |
|
Base Rate Tracker (BRT) |
A variable rate which tracks (moves up or down with) the BOE Base Rate plus or minus an amount added or subtracted by the lender. |
Yes Usually during the tracker bonus period |
· May be beneficial if you can afford to pay more when interest rates go up, in exchange for benefiting when they go down. |
|
Discounted Rate |
Another variable rate but which tracks the lender’s own rate less a percentage discount which may be more significant than a Base Rate Tracker Discount. |
Yes Usually during the discounted bonus period |
· It gives you a gentler start to your mortgage, at a time when money may be tight. But you must be confident you can afford the payments when the discount ends. |
|
Fixed Rate |
Fixed at a certain level for a certain period of time. Usually reverts to the Standard Variable Rate afterwards. |
Yes Usually during the fixed bonus period |
· Your payments will stay the same even if interest rates go up or down so you can budget accordingly. |
|
Capped Rate |
Tracks the lender’s standard variable rate but with a maximum limit at which it is capped for a certain time period. Usually reverts back to the SVR afterwards. |
Yes Usually during the capped bonus period |
· You know the maximum you will pay for a set period of time. · Useful if you want the security of knowing that your payments can't rise above the set level, but still benefit if rates fall. |
