Choosing a mortgage isn't about finding the "best" deal, read"cheapest" mortgage. It's about finding the one that fits your income, your plans, and how much security you need.
Here's a clear walk-through of the main types of mortgages in the UK, what they mean in real life, and when each might make sense.
Fixed-Rate Mortgages
A fixed mortgage locks in your interest rate for a set period, typically 2, 3, 5, or 10 years.
What it means day to day:
Your monthly payments stay the same for the fixed term. No surprises. No changes if the Bank of England adjusts rates.
A real example:
You fix at 4.75% for five years. Even if the base rate rises to 6% or drops to 3%, your payment stays exactly where it is until your fix ends.
Who it suits:
First-time buyers, families with tight budgets, anyone who wants stability.
Important to know:
When a fixed deal ends, your mortgage usually moves onto the lender's standard variable rate (SVR). This rate is almost always higher and can change at any time. Most people remortgage before the fix ends to avoid falling onto the SVR and paying more than they need to. A good mortgage broker will notify you six months before your current fixed term expires to help you remortgage.
Fixed for Life Mortgages (Long-Term Fixed Rates)
A fixed-for-life mortgage keeps your interest rate the same for the entire term, often 20, 30, or even 40 years.
Lenders like Perenna are known for this type of product.
What it means day to day:
Your monthly payment never changes. Not in two years. Not in ten. Not in thirty.
You remove almost all interest-rate uncertainty from your household budget.
A real example:
You fix at 5.19% for 30 years.
Whether the base rate rises, falls, or swings wildly over the next three decades, your payment stays exactly the same.
If you move home, you usually "port" the mortgage to the new property.
Why these products exist:
They're common in other countries, especially the US. The UK has traditionally relied on short fixes, which means regular remortgaging and more exposure to rate spikes. Long-term fixes aim to smooth that out.
Important to know:
- Early repayment charges can last longer, though many lenders offer flexibility.
- Lenders look for strong, stable income and a clear deposit position.
Who it suits:
Borrowers who want long-term certainty: young families, cautious buyers, and anyone planning to stay put for a while.
Quick note: What is an SVR?
Most mortgages move to a standard variable rate (SVR) when your deal ends.
It's the lender's default rate, usually higher and changeable at any time.
Most people remortgage before reaching it.
Tracker Mortgages
A tracker mortgage follows the Bank of England base rate. Your rate moves up or down by a fixed margin.
A real example:
Your deal is base rate + 0.79%.
If the base rate is 5.25%, you pay6.04%.
If the base rate falls to 4.75%, you pay 5.54%.
What to expect:
- Payments rise and fall with the base rate.
- Some trackers have no early-repayment charges — helpful if you're expecting a bonus, inheritance, or sale.
Who it suits:
People who are comfortable with change, or buyers who think rates may fall.
Discount Mortgages
With a discount mortgage, you get a reduction on the lender's standard variable rate (SVR).
The crucial difference:
- Trackers follow the Bank of England base rate.
- Discounts follow the lender's own SVR, which the lender can change whenever they like.
A real example:
- Lender's SVR: 8.49%
- Your discount: 2%
- Your rate: 6.49%
If the lender raises their SVR to 8.99%, your rate automatically rises to 6.99%, even if the base rate stays the same.
Who it suits:
Buyers who want a cheaper starting rate and accept the unpredictability.
Offset Mortgages
Offset mortgages link your savings to your mortgage balance.
You don't earn interest on those savings, but they reduce the amount of your mortgage you're charged interest on.
A real example:
- Mortgage balance: £250,000
- Savings linked: £20,000
- You pay interest as if you owe £230,000.
Some lenders let you use this to reduce payments, shorten your term, or keep the flexibility to dip into savings when needed.
Who it suits:
People with steady savings, business owners, or anyone who keeps cash in their accounts.
Interest-Only Mortgages
With interest-only, your monthly payments cover just the interest. You don't repay the loan itself during the term.
At the end, the full balance must be repaid in one lump sum.
Why most lenders limit them:
- They're seen as higher-risk.
- Lenders want a clear repayment plan, investments, a pension lump sum, downsizing, or other assets.
A real example:
- Loan: £300,000
- Rate: 5%
- Monthly payment: £1,250
- End of term: You still owe £300,000.
Who it suits:
High-income professionals, landlords, or anyone with a solid repayment strategy.
Shared Ownership Mortgages
Shared ownership lets you buy a portion of a property and pay rent on the rest.
A real example:
- Property price: £300,000
- You buy 40% for £120,000
- You get a mortgage on your share and pay rent on the remaining 60%.
Over time, you can "staircase", buying more shares if and when you can.
Who it suits:
Buyers with good incomes but limited deposits or high local prices.
Guarantor / Family-Assisted Mortgages
These rely on support from a parent, relative, or sometimes a close friend.
The guarantor uses their income or property equity to strengthen your application.
A real example:
- You can borrow £180,000 alone.
- With a parent acting as guarantor, the lender may offer £240,000, provided they meet affordability tests.
Some products involve placing savings into a linked security account for a few years.
Who it suits:
Buyers with good earning potential but not enough deposit or borrowing power yet.
Final Thoughts
There's no single "best" mortgage type. It depends on your income, your plans, your appetite for risk, and how much certainty you want over the next few years.
Lender policies vary more than most people realise. Some specialise in single applicants or high earners. Others are better for self-employed buyers, zero-hour contracts, expats, or those with credit issues.
A mortgage adviser can help you work out which lenders will actually support your situation and steer you away from those that won't.