INTEREST RATE OPTIONS
The second choice that you will have to make is between a Fixed Rate deal and a Tracker Rate deal. The title Fixed Rate is a good description of this type of deal. The rate of interest that you are charged is fixed for a fixed term, typically 2 to 5 years from UK providers. This type of scheme is ideal if you need to budget accurately or if you feel that interest rates are likely to rise.
The second option of a Tracker Rate is more suited to periods when you feel interest rates are likely to fall. The rate of interest that you pay is linked to an indice, normally the Bank of England bank rate, which will rise and fall as the markets dictate. This means that your mortgage payments will also rise and fall. Again these schemes normally last for a 2 year period on average.
At the end of either a Fixed Rate or Tracker Rate deal you will be presented with two main options. The first will be to select a further Fixed or Tracker product subject to availability, the second will be to revert to the lenders Standard Variable Rate.