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When you first take out a mortgage you start on an initial interest rate, which usually lasts for one to five years, before moving on to the lender's standard variable rate. You can choose either a fixed- or variable-rate deal.

Which one you should choose depends on whether you think your income is likely to change, whether you prefer to know exactly what you will be paying each month, or if you could cope if your monthly payments went up.

Types of mortgage deal

Below are the main types of mortgage deal. Whether a particular deal offered by a lender is available to you could depend on whether you are a first-time buyer, moving house or changing your mortgage without moving (remortgaging).

We believe you should seek professional advice before you select a mortgage. The Which? Group offers an independent mortgage advice service that looks at every mortgage from every available lender.

Variable-rate mortgages

Your interest rate could change over the deal period. Variable rates include discounted deals, where your rate tracks the mortgage lender's standard variable rate, and tracker deals, where your rate tracks the Bank of England base rate.

Discounted deals can be "stepped" so, for example, you might take out a three-year deal but pay one rate for six months and then a higher rate for the remaining two and a half years.

Some variable rates have a 'collar' - a rate below which they can't fall - or are capped at a rate they can't go above.

Fixed-rate mortgages

You pay the same interest rate for the whole deal, regardless of interest rate changes elsewhere.

Other features to consider


Some mortgage deals give you cashback when you take them out but you should factor this into the overall cost of the deal before choosing one of these products.


Flexible mortgages let you over and underpay, take payment holidays and make lump-sum withdrawals. This means you could pay your mortgage off early and save on interest.

Some conventional deals also let you overpay by a certain amount each year, typically 10%.

Other types of flexible mortgages include offset mortgages, where your savings are used to offset the amount of your mortgage you pay interest on each month.

And current account mortgages combine your current account, savings and mortgage into one so all your credit balances offset your mortgage debt.

Flexible deals can be more expensive than conventional ones so make sure you will actually use the features before taking one out.

They can be particularly worthwhile for higher-rate taxpayers because, as you don't actually receive the interest on your savings, you don't pay any tax on it either.

Mortgage advice

Smart Estates UK LTD does not offer mortgage, advice we have partnerships with many mortgage advisors from which we can get our customers sound advice

We believe you should take independent advice before choosing a mortgage. 

If you're looking to find out what your repayments would be at different interest rates, or want to get an idea of how much you could borrow, try using the mortgage calculators offered by many Mortgage Advisers.

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