UK mortgage types explained

Who this guide is for

It’s for first-time buyers, home movers and anyone remortgaging who wants to understand the options. It also helps if you’re coming to the end of a deal and wondering what comes next.

The two big choices

When you look at mortgages, you’re really making two choices:

1. How the rate behaves. Does it stay the same, or can it change?
2. How you repay. Do you pay off the loan as you go, or just the interest?

On top of that, some mortgages have extra features, such as offset or cashback.

How the rate behaves

Checked 5 October 2026. This table explains how each type works. It doesn’t show live rates, which change often and depend on your circumstances.

Fixed rate

With a fixed rate, your interest rate stays the same for the deal period. Your monthly payment won’t change during that time, which makes budgeting easier.

When the fixed period ends, you’ll usually move to the lender’s standard variable rate unless you choose a new deal. A longer fix gives more certainty, but leaving early may mean paying an early repayment charge.

Tracker

A tracker follows another rate, usually the Bank of England’s Bank Rate, plus a margin. If Bank Rate goes up, your payments go up. If it goes down, your payments usually go down too.

Some trackers have a collar or floor. This is a minimum rate, so your payments won’t fall below a set level even if Bank Rate drops further. Check the small print.

Standard variable rate

Every lender has its own standard variable rate, often called the SVR. The lender can change it at any time, not only when Bank Rate moves.

The SVR is usually higher than the lender’s other deals. On the plus side, it usually has no limit on overpayments and no exit fee. Many people end up on the SVR by accident when a deal ends.

Discounted variable

A discounted deal gives you a set discount off the lender’s SVR, for a set time. Because the SVR can change, so can your payments.

Compare the actual rate you’d pay, not the size of the discount. A big discount off a high SVR may still leave you with a higher rate than a smaller discount elsewhere.

How you repay, and extra features

Checked 5 October 2026.

Repayment

A repayment mortgage is the most common type. Each month you pay some interest and some of the loan itself, so the balance goes down over time. If you make every payment, the mortgage is cleared by the end of the term.

The term is usually 25 years, though shorter and longer terms are available. A longer term lowers your monthly payment but usually means paying more interest overall.

Interest-only

With an interest-only mortgage, you pay only the interest each month. The loan itself stays the same and must be repaid at the end of the term.

Very few lenders offer interest-only mortgages now, mainly in special circumstances. If you have one and you’re worried about repaying the loan, contact your lender early.

Offset mortgages

An offset mortgage links your savings to your mortgage. You pay interest only on the difference between your mortgage balance and your savings.

Your linked savings usually earn no interest. Savings held with your mortgage lender are protected by the FSCS up to £120,000 per eligible person per authorised firm from 1 December 2025 (source: FSCS). See our guide to FSCS protection limits.

Cashback mortgages

Some mortgages pay you a lump sum when the loan completes. That can help with moving costs, but the rate is often higher. Work out whether the cashback outweighs the extra interest over the deal.

Comparing the real cost: APRC

The headline rate isn’t the whole picture. Fees can make a big difference, especially on smaller loans.

The annual percentage rate of charge, or APRC, shows the total yearly cost of the mortgage, including fees. It assumes you keep the mortgage for the full term, so it’s most useful for comparing like with like. Our guide to APR explained covers how these rates work.

Overpayments and early repayment charges

Many mortgage deals let you overpay, often up to 10% of the balance a year, without a fee. Overpaying can reduce the interest you pay and shorten your term.

An early repayment charge, or ERC, may apply if you overpay more than your allowance, or leave the deal early. ERCs usually apply only during the deal period. You’ll find the details in your mortgage offer and the European Standardised Information Sheet, often called the ESIS.

If you’re weighing up overpaying against saving, see our guide on whether to overpay your mortgage or save.

When your deal ends

When a fixed, tracker or discounted deal ends, you’ll usually move to the lender’s SVR. You can usually choose a new deal before that happens.

You have two main options:

• A product transfer. You move to a new deal with your current lender.
• A remortgage. You move your mortgage to a different lender.

Put your deal end date in your diary a few months ahead. That gives you time to compare options.

If you’re moving home, check whether you can take your mortgage with you. Moving a mortgage to a new property usually needs fresh affordability checks.

How lenders check affordability

Lenders look at your income, your regular spending and your credit history. They want to see that you can keep up repayments, now and if rates rise.

Under FCA rules, lenders must consider the effect of likely rate rises over at least the next five years, and assume a rise of at least 1%. There’s no stress test where the rate is fixed for five years or more.

Lenders also limit how many loans they make at 4.5 times income or more. Our guide to credit score basics explains how your credit history fits in. You can use our budget planner to see what monthly payment might fit your budget.

Deposits and help for first-time buyers

The bigger your deposit, the lower your loan-to-value, or LTV. A lower LTV can give you access to a wider range of deals.

The Mortgage Guarantee Scheme has been permanent since July 2025. It supports lenders offering mortgages at 91% to 95% LTV, meaning a deposit of 5% to 9%. The Help to Buy Equity Loan scheme is closed to new applications in England.

If you’re aged 18 to 39, a Lifetime ISA can help you save for a first home costing up to £450,000. See our guides to Lifetime ISA rules and a Lifetime ISA vs cash ISA for a first home.

Stamp Duty Land Tax in England and Northern Ireland

Stamp Duty Land Tax is charged on property purchases in England and Northern Ireland. These are the residential rates from 1 April 2025, checked 5 October 2026.

First-time buyers pay no Stamp Duty on the first £300,000, and 5% on the portion from £300,001 to £500,000. If the price is above £500,000, first-time buyer relief doesn’t apply.

An extra 5% applies if you’re buying an additional property, and an extra 2% if you’re not resident in the UK. Scotland has Land and Buildings Transaction Tax, and Wales has Land Transaction Tax, with different rates. Check Revenue Scotland or the Welsh Revenue Authority for details.

Worked examples

These examples are illustrations, not recommendations. Affordability, LTV, credit history and lender rules decide what you can actually get.

Example one: first home, tight but stable income

Sam and Riley are buying a flat and want their payment to stay the same while they settle in. They compare a 5-year fixed rate against a tracker, using a mortgage calculator for the same loan size and term.

The fixed deal costs a little more each month today, but it removes the worry of a sudden rise. They put the end date in their diary six months early, so they don’t drift onto the SVR by accident.

Example two: remortgaging with a cash buffer

Chris has built up a large emergency fund in easy-access savings and is remortgaging. An offset mortgage looks appealing, because the savings would reduce the interest charged.

Chris compares the offset rate and fees with a standard fixed deal plus keeping savings separate. Which works out cheaper depends on how large the cash buffer stays over the deal, not on the marketing alone.

Advisers and brokers

A regulated mortgage adviser or broker can look at your situation and recommend a mortgage. Some search the whole market, while others work with a limited range of lenders.

Brokers must tell you about any fees they charge, and how they’re paid. Ask about this at the start.

If you’re struggling with payments

If you’re finding it hard to keep up with your mortgage, contact your lender as early as you can. Lenders have to treat you fairly and consider options with you.

Free help is available from MoneyHelper and Citizens Advice. Our guide on whether to pay off debt or save covers priority debts, which include mortgage arrears.

The catch

Key takeaways

• Mortgages differ by how the rate behaves and how you repay.
• Fixed rates give certainty for a set period; variable rates can change.
• Repayment mortgages are the most common, and interest-only deals are now rare.
• Compare deals on APRC, and check overpayment limits and ERCs.
• Diary your deal end date so you don’t slip onto the SVR by accident.
• A regulated mortgage adviser or broker can give a personal recommendation.

Related reading

Related guides

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FAQ

Where does my mortgage go once the fixed period runs out?

It depends on what you do next. If you don’t choose a new deal, you’ll usually move to your lender’s standard variable rate. You can usually arrange a product transfer or remortgage before the fixed period ends.

Does locking in for longer always mean less risk?

Not always. A longer fix gives you payment certainty for longer, but leaving early may mean an early repayment charge. If you might move or want flexibility, a shorter deal could suit you better.

Can I pay extra off my mortgage without paying a charge?

Possibly. Many deals let you overpay up to 10% of the balance a year without a fee. Above that, or if you leave the deal early, an early repayment charge may apply, so check your mortgage offer.

Is loan-to-value the same thing as my deposit?

No. Loan-to-value, or LTV, is your mortgage as a percentage of the property’s value. Your deposit is the other part, so a 10% deposit means a 90% LTV.

Is a mortgage broker essential?

No. You can go direct to a lender. A regulated mortgage adviser or broker can compare options and give a personal recommendation, and they must tell you about any fees.