As well as deciding on your repayment method, you will also need to consider the interest rate deals on offer. It is highly recommended to understand some of vocabulary that you lender or mortgage broker will use. You may be more able to get the best contract for the house of your dream. Here you will find a detailed overview of the main interest rates.

          First: Standard variable rate. If you opt for a variable rate mortgage your payments will go up or down with the lender’s standard interest rate. The changes are often following Bank of England base rate changes. This type of rates is right for you if you can afford to pay more when interest rates soar and prefer the flexibility to be able to make overpayments without penalty (no early-repayment fees).
Second: Standard variable rate with cash back. In this type of deals it is very similar to the previous rate but you get a substantial sum, based on the amount borrowed, when you take up the mortgage. You’re usually tied into the variable rate for a set period.

          Third: discounted interest rate. In this case your payments are variable. For limited period you will start paying a lower interest rate and then you will be charged the lender's standard variable rate. Be aware and planned that you will have to face a dramatic increase of your monthly payment. But this type of mortgage is suited to you if you are confident that your income will increase and you can afford the increased payments when the discount period ends
Fourth: Fixed rate. As the name set you will pay a fixed rate of interest for a set period. The advantage is you will know exactly what you’ll be paying each month during that time. When the fixed period ends, you’ll usually move to the lender’s standard variable rate. Be aware of the opportunity cost in the case of falling interest rates, so check the rates trend.

          Fifth: Capped or Collar rates. With a capped rate you pay a variable interest rate, but there’s a ceiling so your payments won’t go above a certain amount for a set period. Some deals include a ‘collar’ too - this is the lowest rate you’ll get. If interest rates fall below the collar, you’ll lose out. ( home buyers Ellsworth maine )