
Choosing a mortgage is one of the most important steps in buying a home. The type you choose affects your monthly payments, how quickly you build equity and how much interest you pay over the long term. With a wide range of mortgage options available, understanding the differences helps you make a decision that suits your budget and long-term plans.
Below is a clear breakdown of the main types of mortgages available in the UK and what each one offers.
Fixed-rate mortgage
A fixed-rate mortgage keeps your interest rate the same for an agreed period, usually 2, 5 or 10 years.
Good for people who want:
- Predictable monthly payments
- Protection from interest rate rises
- A clear budget during the fixed term
Things to keep in mind: You may face early repayment charges if you want to switch deals or repay the loan during the fixed period. When your fixed term ends, you usually move to the lender’s standard variable rate unless you remortgage.
Variable-rate mortgage
A variable-rate mortgage means your interest rate can go up or down. Payments will rise or fall depending on rate changes.
There are two main types:
1. Standard variable rate (SVR)
This is the lender’s default rate. It’s usually higher and can change at any time.
2. Discounted variable rate
This gives a discount on the lender’s SVR for a set time. For example, if the SVR is 6% and your discount is 1%, you’d pay 5%.
Best for people who: Don’t mind changes in monthly payments and want flexibility without long fixed terms.
Tracker mortgage
A tracker mortgage follows the Bank of England base rate plus a set percentage. For example:
Base rate 5% + lender fee 1% = 6% pay rate.
Why people choose them:
- Rates can drop, lowering monthly payments
- They’re usually straightforward and transparent
Potential downside: Payments increase whenever the base rate rises.
Tracker deals sometimes come with early repayment charges, so check the details before applying.
Interest-only mortgage
With an interest-only mortgage, you pay only the interest each month. The amount borrowed stays the same until the end of the term, when you must repay it in full.
Suitable for:
- Some buy-to-let investors
- Borrowers with a clear repayment plan (investments, property sale, savings)
Important point: Lenders will require proof of how you plan to repay the balance. This option carries more risk for homebuyers because the debt itself doesn’t shrink during the mortgage term.
Repayment mortgage
A repayment mortgage is the most common choice for residential buyers, as each monthly payment covers interest and a portion of the loan. Therefore, by the end of the term, the mortgage is fully paid off.
Why it works for most people:
- Debt reduces every month
- No need for a separate repayment strategy
- Often seen as lower risk
Repayment mortgages can be paired with fixed or variable rates.
Buy-to-let mortgage
Buy-to-let mortgages are designed for people purchasing property to rent out. These mortgages usually require:
- A larger deposit (often 20–25%)
- Evidence of rental income that covers the mortgage
- Higher fees and different affordability checks
Most buy-to-let loans are interest-only, but repayment options exist too.
Government-backed options
Some buyers may qualify for government-supported schemes that help with affordability or deposits.
Shared ownership
You buy a percentage of the home (usually 25–75%) and pay rent on the rest, so over time, you can buy more of the property.
Right to buy
Council tenants may be able to buy their home at a discount.
How to choose the right mortgage for you
The best mortgage depends on your income, deposit size, long-term plans and comfort with payment changes. Many people work with a mortgage broker & adviser to compare deals, understand lender criteria and choose a mortgage suited to their financial situation.
Before deciding, think about:
- Whether you want predictable payments
- How long you plan to stay in the home
- Your deposit size and credit history
- How much flexibility you need
- Whether rising rates would affect your budget
A mortgage is a long-term commitment, so clarity upfront makes the whole process smoother.
Picking the right mortgage for your needs
Understanding the types of mortgages available helps you feel more confident as you move through the home-buying process. Each option has benefits and limitations, and the right choice depends on your lifestyle, goals and finances.
With the right guidance and a clear knowledge of how each mortgage works, you’ll be in a strong position to choose a deal that supports your long-term plans.


