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Making sense of mortgage terms

Wouldn’t it be great if we were all taught in schools all about mortgages and what fixed rates, trackers, and variable rates are?

Then it wouldn’t be quite so overwhelming when you’re about to borrow the largest sum of money in your life!

Fixed Rate

With a fixed rate mortgage, the interest rate stays the same for the term of your mortgage, meaning your monthly payment stays the same each month, until the term ends. This is great for those on a limited budget who really need to know what they will be paying each month. However, if interest rates drop, your mortgage won’t reduce as you will carry on paying the same interest rate,


The mortgage interest rate – and hance your monthly payments – can vary, as the rate is linked to the Bank of England base rate, plus a percentage which is agreed by the lender. You have to remember that your mortgage payments can change – ether up or down – at any time.

Standard Variable Rate

The interest rate is chosen by the lender, rather than tracking the base rate. There’s no specific term so you should be able to change deals any time you want to without incurring a charge, but your monthly payments can change at any time.


You place your mortgage and your savings with the same lender and the savings are used to ‘offset’ the mortgage interest. You won’t make any interest on the savings, but you won’t pay any interest on the mortgage debt of the equivalent amount of savings. These are usually a better long term rather than short term mortgage option.

For advice on mortgages please call us on 0121 744 4144 (option 2) so we can put you in touch with our recommended mortgage advisors.

If you’d like any advice on what the local property market is doing, call smarthomes on 0121 744 4144 (option 2).

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