Types of interest payment

There are various schemes available however the most commonly used schemes are -

Standard variable rate - interest is charged at a variable rate typically following the Bank of England base rate.

Fixed - the interest rate charged at a fixed rate for a fixed amount of time regardless of the lenders variable rate.

Capped - similar to a standard variable rate however a limit is set to the maximum %

Discounted - the interest is at a set discount below the lenders variable rate. For example if you had 3% discount for 2 years and in year one the lenders variable rate is 9% then you would be paying 6%. If then in year two the rate dropped to 7% your discounted rate would drop to 4%. At the end of the discounted period it the rate would revert to the lenders variable rate.

This is just some of the schemes available, if you wish to look into mortgages in more detail and find out about the other schemes and which would be most suitable for you please contact us.