Dictionary
- Standard Variable Rate Mortgage
- This is a mortgage where your payments go up and down with the lenders standard variable rate. Banks and building societies usually put their standard rate up and down in line with the Bank of England base rate although there is no reason for them to do so.
- Base Rate Tracker Mortgage
- This is a scheme where your rate is directly linked with the Bank of England base rate and alters as and when the Bank of England changes. The difference between this rate and a standard variable rate is that if the Bank of England rate decreases for instance you know that your rate will come down straight away and by exactly that amount. Your rate is usually linked to the Bank of England's rate for a set period and then reverts to the standard variable rate.
- Fixed Rate Mortgage
- With this scheme your rate is fixed for a period of time, perhaps 2, 3 or 5 years. The fixed rate mortgage is ideal for first time buyers as you can budget for your mortgage costs in the early years a payments are fixed at the start of your mortgage.
- Discounted Rate Mortgage
- With a discounted rate your rate is discounted from the lenders standard variable rate for a certain period of time. E.g. 1% discount for 2 years. At the end of the stated period your rate will revert back to the standard variable rate.
- Capped Rate Mortgage
- A capped rate mortgage has a certain upper limit above which the rate cannot go, but it will follow the standard variable rate downwards. They are generally worth considering when interest rates are either increasing rapidly, or when there is uncertainty over in which direction they are going.
- CAT Mortgage
- These are standards set by the Government for mortgages. CAT is short for Charges, Access and Terms. CAT standard mortgages should ensure a reasonable-value mortgage with no hidden charges or terms but are not necessarily better than other non CAT mortgages.
- Cashback Mortgage
- With a cashback mortgage the lender will give a lump sum on or before completion of your mortgage. Normally your loan is on the lenders standard variable rate and you are tied in for several years. The aim of a cashback mortgage is to help with costs of moving but the cash can be used for any purpose.
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