Start with your plans and your budget
Choosing a mortgage involves more than predicting the next interest-rate announcement. Start by writing down what you can afford each month, how much room you have for changes and whether you expect to move or repay some of the borrowing.
How the interest rate works
A fixed rate stays the same for an agreed period. A tracker follows a specified reference rate, usually the Bank of England base rate, with a margin set by the mortgage terms. Tracker payments can rise as well as fall. Check whether a minimum rate applies. MoneyHelper explains these differences in its guide to mortgage interest-rate options.
Questions to put alongside each illustration
- What would the monthly payment be, and how would a higher tracker rate affect my budget?
- What fees would I pay, and what is the total cost over the period I expect to keep this deal?
- Are there early repayment charges or limits on overpayments?
- What happens at the end of the initial deal?
- If I move, what conditions would apply to taking the mortgage with me?
A lower advertised rate does not settle all these questions. Ask your adviser to explain the figures and conditions for the actual products available to you.
Prepare for a conversation
Have your current mortgage statement, deal end date and likely moving plans to hand. Write down the payment level you feel comfortable with and any expected changes to your income or spending. You do not have to predict future rates to explain your priorities.
This is general preparation information, not a recommendation to choose either product. Discuss your circumstances through our residential mortgage service or remortgage service.
Your home may be repossessed if you do not keep up repayments on your mortgage.