Choosing a mortgage is one of the biggest financial decisions you’ll make. To help you feel confident, it’s important to understand how mortgage rates work, the different types available and what they could mean for your monthly repayments.

This guide gives an overview of mortgage rates. It is for information purposes only and does not constitute personalised advice. We recommend speaking with a qualified mortgage adviser before making any decisions.

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🔹 What is a Mortgage Rate?

A mortgage rate is the interest charged by a lender on the money you borrow to buy your home. The rate affects the size of your monthly repayments and the overall cost of your mortgage.

Even a small difference in rates can have a big impact over time, so it’s important to consider your options carefully.

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🔹 Types of Mortgage Rates

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Fixed Rate

• Your interest rate stays the same for a set period (e.g. 2, 3, or 5 years).

• Your monthly payments are predictable, making budgeting easier.

• At the end of the fixed period, you usually move onto the lender’s Standard Variable Rate (SVR) unless you arrange a new deal.

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Variable Rate

• Your payments can go up or down depending on changes to the lender’s SVR.

• You may benefit if rates fall, but your payments could rise if rates increase.

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Tracker Rate

• Your rate tracks the Bank of England Base Rate (plus a set percentage).

• Payments will rise or fall in line with base rate changes.

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Discount Rate

• You receive a discount on the lender’s SVR for an initial period.

• Payments can still change if the lender alters its SVR.

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🔹 What Happens When a Deal Ends?

Most initial mortgage deals (such as fixed or tracker rates) last for a limited time. When the deal ends, you’ll usually be moved to your lender’s Standard Variable Rate, which is often higher.

Reviewing your mortgage before your current deal ends can help you avoid paying more than necessary.

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🔹 Factors  That  Affect  Your  Mortgage  Rate

• Deposit / Loan-to-Value (LTV): A larger deposit usually means access to lower rates.

• Credit history: Lenders may offer better rates if you have a strong credit record.

• Mortgage term: The length of your mortgage can impact your payments and overall interest costs.

• Type of mortgage: Fixed, tracker and variable products have different features and risks.

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🔹 Fees and Other Costs

When comparing mortgages, it’s not just about the interest rate. You should also consider:

• Arrangement fees

• Valuation fees

• Legal fees

• Early repayment charges (ERCs) – if you want to leave a deal early

The Annual Percentage Rate of Charge (APRC) combines interest and fees into a single figure, giving you a better way to compare different deals.

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🔹 Things to Consider

• Interest rates can rise or fall, affecting variable and tracker products.

• A lower rate is not always the best deal if fees are high.

• Your mortgage is secured on your home, if you do not keep up repayments, your home may be repossessed.

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🔹 Getting Advice

With so many options available, choosing the right mortgage can be complex. A mortgage adviser can:

• Review your personal circumstances

• Explain the benefits and risks of different mortgage types

• Search the market for suitable products

• Help you with the application process

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