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3 Types of Mortgage

Mortgages, mortgages, mortgages – it may seem that’s all we go on about… But, as an online mortgage specialist, it’s kind of what we do. We know all about mortgages – the different types and what works for each individual person. Because there is no right answer for everyone. There’s different types of mortgages you should definitely know about before getting yourself locked down with one.

In this post, we’ll be covering (you guessed it) the different types of mortgages! More specifically, 3 different types and which one is best for you. We’ll cover fixed, tracker and variable mortgages too. If you don’t know what those all mean, don’t worry. We’ll go through all of them with you in our article post. So, kick back and relax. (But not too far back, otherwise you won’t see the screen). This guide is essential for first-time buyers, as you need to know what you'll be signing on for!

types of mortgages explained

Three Mortgage Types

So, like we’ve said, the 3 types of mortgages we’ll be covering today are:

  1. Fixed Rate
  2. Tracker Rate
  3. Standard Variable Rates

We’ll dive into each of them, below – pros, cons and all!

1. Fixed

The first are Fixed Mortgages. As you may be able to guess by the fairly obvious name, these mortgage rates are fixed. It means, that the price you pay won’t increase over the life of the mortgage, as well as you’ll know exactly what the mortgage will cost. The fixed rate is usually part of an incentive deal and can last from anywhere between 2 – 10 years. Once the fixed incentive period ends, you’ll return to a variable rates mortgage. Other benefits? You’ll be able to budget properly, as you’ll know how much your mortgage repayments will cost each month.

Annoyingly, if interest rates fall you’ll still be paying the same amount back. Unlike with other mortgages, when interest rates go up, you pay more. And when they go down, you pay less. But with a fixed mortgage, you pay the same amount throughout the entire loan term. There’s no early exit strategy too, unless you’re willing to pay big money.

2. Tracker

Tracker Mortgages work differently to the fixed ones mentioned above. They follow, or track, the national interest rates, meaning your loan repayments can either rise or fall over the life of your mortgage. Whilst they follow the rise and fall of interest rates, specifically the Bank of England’s, they don’t have the exact same base rate – the interest rate just moves with it. One advantage of this is that you may have periods where you pay back less. Where interest rates fall, you can start to pay back less interest on your mortgage.

However, it’s uncertain whether rates will fall or rise, so you may end up in a period where your interest rates are high. If the interest rates rocket, then yours will too, meaning you’ll be paying back a hell of a lot. Like with fixed mortgages, there’s a fee for early withdrawal from the track mortgage, but usually the incentive period on tracker mortgages lasts about 2 years. However, some tracker rates last for the full lifetime of the mortgage – so be wary.

3. Standard Variable Rates (SVRs)

Finally, we have standard variable rate mortgages, or an SVR mortgage if that’s too much to remember. Each individual mortgage provider offers these, and they can move the interest rates whenever they want – however, it’s usually when the Bank of England’s interest rates move. After the end of a tracker or fixed rate incentive period, this is what most borrowers end up on. Whilst it follows moving interest rates – great if they drop, you’ll pay less! But there’s also no early repayment charge on these kinds of mortgages.

Although, these mortgages are some of the most expensive, and like tracker mortgages, if interest rates rise, you’ll be paying back more on your mortgage. As the one of the most expensive mortgages, there’s usually a cheaper offer out there – if you do your research.


And that’s it in a nutshell! These are the three main types of mortgages available in the UK. Finding the ones that’s right for you is usually about finding the best deal. Each mortgage varies from lender to lender, and whilst the types of mortgages are the same, interest rates are dependent on the lender.

Luckily for you, we’ve got a handy tool that allows you to compare mortgage rates and find the deal that’s right for you! Use our application page to see what you could borrow. Mortgages Made Easy from the Mortgages Online team.


Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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