If you're looking for a mortgage, you are probably being faced by a huge amount of diverse types of mortgage and terminology about them. This particular article will help you get right to the point, since in truth there are only four major types of mortgage offered. Additional kinds are either one of these four by a different name, or not often offered.

Fixed rate mortgages will ensure that you pay a set interest rate for a particular or 'fixed' length of time. It is usually between 1 and 5 years, although under certain circumstances the interest rate can be fixed for for a longer time. When the fixed time period has run out, you will begin paying interest at the Standard Variable Rate.

Under the conditions of a discounted rate mortgage, the Standard Variable Rate of a mortgage lender is temporarily reduced or 'discounted' for a set period. This will commonly be between 1 and 5 years. Once the discounted time period ends, you start paying the lender's Standard Variable Rate of interest.

With a capped interest rate home loan, the interest rate mirrors the lender's Standard Variable Rate except that there is a point above which the rate of interest you pay is guaranteed not to go over. This arranged level is referred to as the 'cap' and in common with the majority of introductory mortgage or remortgage deals will last between 1 and five years.

This is a kind of repayment mortgage loan that lets you make frequent overpayments and underpayments with out any penalties. This is excellent should you discover that your income has increased or you discover that you suddenly have some extra cash because you are able to make lump sum payments, again with out penalty. This type of mortgage typically has interest calculated daily instead of annually. This means that each time you make an overpayment you immediately impact the quantity of interest you pay. Should you do this on a regular basis it is possible to potentially knock years of your loan term.

It is a variable rate home loan where the interest rate follows the Bank of England base rate as well as the mortgage lenders set rate. For instance, if the Bank of England base rate is 3.75% the lender may set a further rate of 1-2% above this. You would consequently be having to pay 4.75 - 5.75% interest. If the Bank of England rate was to drop to 3.5% you would be paying 4.5 - 5.5%. A few lenders offer initial periods for tracker mortgages of as little as .75% above the base rate. Of course, as with all variable rate mortgages, the interest rate can go up as well as down.