What Are the Different Types of Mortgages Available in the UK?

Fixed-rate mortgage
A fixed-rate keeps your interest and monthly payment the same for a set period, usually 2, 3 or 5 years. It makes budgeting simple and protects you from rate rises, but you may pay early repayment charges if you leave the deal early or overpay beyond the allowance.

Tracker mortgage
A tracker follows the Bank of England base rate plus a set margin, so your payment can go up or down over time. It suits people who want flexibility or think rates may fall, but you must be comfortable with potential payment increases.

Discounted variable mortgage
This gives you a discount off the lender’s standard variable rate (SVR) for a time. Payments can still change because the SVR can move, so it’s often chosen as a short-term stepping stone rather than a long-term fix.

Standard Variable Rate (SVR)
SVR is the default rate you move to when a deal ends if you do nothing. It’s usually higher than fixed or tracker products and can change at the lender’s discretion, so most borrowers switch before reaching it.

Repayment (capital-and-interest) mortgage
Each payment covers interest and a slice of the amount borrowed, so the balance falls every month. Provided you pay on time, the mortgage will be cleared by the end of the term.

Interest-only (residential) mortgage
Monthly payments cover just the interest, so the balance does not reduce. You must have a clear, acceptable plan to repay the capital at the end of the term, such as savings, investments or sale of the property.

Offset mortgage
Your savings are linked to your mortgage to “offset” the balance on which interest is charged. You keep access to the savings and can reduce interest or the term, but rates can be higher than on standard deals.

Buy-to-let mortgage
Designed for rental properties, these usually require a larger deposit and must pass a rental stress test. Many are interest-only to keep cash flow predictable, but lenders assess the rent and your circumstances carefully.

New-build mortgage
Aimed at brand-new homes and flats, these products consider developer incentives and completion timing. Lenders may set specific criteria for lease terms, snagging and warranties, so paperwork needs to be in good order.

Shared Ownership
You buy a share of a property and pay subsidised rent on the rest, with the option to “staircase” and purchase more over time. It can reduce the deposit needed, but you must factor in rent, mortgage and service charges together.

Joint Borrower, Sole Proprietor (JBSP)
A family member joins the mortgage to boost affordability, but only the main buyer goes on the deeds. It can help first-time buyers over the line without triggering extra stamp duty for the helper, though all borrowers are liable for payments.

Guarantor mortgage
A close relative agrees to support your mortgage if you cannot meet payments. It can improve affordability, but the guarantor’s own borrowing capacity and assets may be affected, so everyone should understand the risks.

Self-employed and contractor mortgages
Lenders will focus on the stability of your income rather than a single salary. Expect to provide tax calculations, accounts or contract evidence, and be ready to explain any swings in profit or day-rate.

Green or energy-efficient mortgages
Some lenders offer preferential pricing or incentives for properties with stronger EPC ratings or when you commit to energy upgrades. The benefit varies by lender, so it’s worth comparing against standard deals.

Retirement Interest-Only (RIO)
For older borrowers, RIO keeps payments to interest only with no fixed end date. The capital is usually repaid from sale of the property, moving into care or from the estate, subject to affordability in retirement.

Lifetime mortgage (equity release)
A lifetime mortgage lets you release equity from your home, with interest typically rolling up over time. You remain the owner, but the balance grows, so advice and a clear plan for long-term impacts are essential.

Let-to-buy
You remortgage your current home onto a buy-to-let and use released equity as the deposit for your new residential purchase. It can work when you want to move but keep your existing property, provided rent and affordability stack up.

Second-charge mortgage (secured loan)
A second mortgage sits behind your main one to raise additional funds without disturbing your current deal. Rates and criteria differ from remortgaging, so compare total cost, fees and any early repayment charges.

Bridging finance
Short-term, fast funding used to cover gaps when buying, renovating or completing at auction before a long-term mortgage is in place. It is flexible but more expensive, so the exit route and timeline must be crystal clear.

Offset-with-current-account (current account mortgage)
Your mortgage and current account are combined so daily balances reduce interest automatically. It can be powerful for higher savers or those with variable income, but requires discipline to realise the benefit.

Summary of Different Types of Mortgages

• Fixed-Rate Mortgage: Set interest rate for 2, 5, or 10 years.
• Tracker Mortgage: Follows the Bank of England base rate.
• Discounted Mortgage: Offers a discount on the lender’s standard variable rate (SVR).
• Interest-Only Mortgage: Pay interest only, with capital repaid later.
• Buy-to-Let Mortgage: Designed for landlords.
• Guarantor Mortgage: Requires a family member to guarantee repayments.