Once you understand the machine, choose its settings. UK mortgages differ mainly in how the rate behaves — fixed, tracker, discount or standard variable — and in the fees and exit penalties wrapped around the deal. The right choice depends less on predicting rates than on how much certainty your budget needs and how long your plans are stable.
The four rate behaviours
A fixed rate cannot change during the deal period — certainty at a small premium. A tracker mortgage moves automatically with the Bank of England base rate, up and down. A discount deal sits at a margin below the lender's SVR, which the lender can move at will. The SVR itself — the standard variable rate you revert to when any deal ends — is almost always the worst value; treat landing on it as a scheduling failure.
ERCs: the exit toll
Most fixed and many tracker deals carry an Early Repayment Charge — commonly 1–5% of the balance — for leaving during the deal period. A five-year fix with a 4% ERC on a £250,000 loan is a £10,000 toll if life makes you sell in year two. Match the fix length to the horizon you are genuinely confident about, and check whether the deal is portable to a new property.
Fees versus rate, and the remortgage rhythm
A £999 product fee on a lower rate often beats a fee-free deal on a bigger loan — but not always; compare total cost over the deal period. And note the rhythm of UK borrowing: when your deal ends you remortgage to a new one (or your lender's retention offer). Diarise the end date the day you complete; the SVR gap between deals is where lenders make easy money.
| Type | How the rate behaves | Best for | Main catch |
|---|---|---|---|
| Fixed (2, 3 or 5 years) | Cannot change during the deal | Tight budgets needing certainty | ERCs if you leave early; you miss rate falls |
| Tracker | Moves with the base rate | Buyers with slack who can absorb rises | Payments rise the month the base rate does |
| Discount | Margin below the lender's SVR | Sometimes the cheapest entry rate | Lender can raise the SVR at any time |
| SVR | Whatever the lender decides | No one, for long | Usually the most expensive rate on the shelf |
Your action list
Practical tips
- The overpayment calculator shows what your deal's typical 10%-a-year fee-free overpayment allowance could save you.
- Five-year certainty is worth paying for when your plans are stable — and dangerous when they are not.
What can go wrong
- Fixing for longer than your honest time horizon converts a life change into a five-figure Early Repayment Charge.
- Comparing deals by headline rate alone is exactly the mistake product fees are designed to exploit.
- PropertySquares provides education, not financial or legal advice. Verify current rules and obtain advice for your circumstances before acting.