Types of mortgage, explained

Fixed-rate

The default for most UK first-time buyers in 2026. Your interest rate is locked for a fixed period — typically 2, 3, 5 or 10 years — and your monthly payment doesn't move during that time. After the fix, you roll onto the lender's Standard Variable Rate unless you remortgage or product-transfer first.

Pros: certainty. Payment doesn't change with MPC decisions. Easier to budget. 5-year fixes have been the modal UK choice since 2022 on rate-certainty grounds.

Cons: Early Repayment Charges (typically 1-5%) apply if you leave during the fix — problematic if you want to sell, move, or remortgage early. If rates fall sharply during your fix, you're stuck paying the higher rate.

Tracker

Rate = Bank of England Bank Rate + a fixed margin. The whole thing moves every time the MPC changes Bank Rate.

Pros: you benefit instantly if the MPC cuts. Many trackers have low or no ERCs, giving you freedom to remortgage at any time.

Cons: payment uncertainty. When Bank Rate rose from 0.1% to 5.25% in 2022-23, tracker borrowers felt every increase. You need either a good affordability cushion or a risk appetite to choose this comfortably.

Discount

Rate = the lender's Standard Variable Rate minus a set discount for a defined period (usually 2 years). The SVR moves, typically in step with MPC changes but at the lender's discretion, and your rate moves with it — just starting lower.

Pros: sometimes cheaper than an equivalent tracker.

Cons: you're exposed to the lender's commercial decisions about their SVR, not just MPC policy. A lender can (and sometimes does) move SVR independently of Bank Rate — it's their prerogative. Discounts also reset to full SVR at the end of the discount period.

Standard Variable Rate (SVR)

The lender's "default" rate you roll onto when your fix, tracker, or discount ends. In 2026, UK SVRs typically sit around 7-9% — well above any best-buy deal.

Staying on SVR is almost always a poor decision: typical 2-5 percentage point gap vs a remortgage or product transfer means £100-£500+ extra per month on a typical loan. Start shopping for a new deal 4-6 months before your current deal ends.

Offset

A current account or linked savings account offsets against your mortgage balance for interest calculation purposes. If you owe £200,000 and have £20,000 in the linked account, interest is calculated on £180,000 — but the £20,000 stays accessible to you.

Pros: effective interest savings. Flexible — you can draw on the savings when you need them. Particularly tax-efficient for higher-rate taxpayers (savings interest is tax-free in this arrangement because the benefit is reduced mortgage interest, not earned income).

Cons: rates tend to be 0.2-0.5 percentage points higher than equivalent non-offset products. Only worth it if you'll maintain a meaningful balance in the offset account.

Interest-only

Pay interest each month, not capital. The original loan balance never reduces — you still owe the full amount at the end of the term and need a repayment vehicle (investments, savings, sale) to clear it.

Post-MMR (2014), interest-only residential mortgages are restricted: typically 25%+ deposit, higher income thresholds, evidence of a credible repayment plan. Most UK interest-only lending is buy-to-let, where rents cover interest and the sale of the property eventually repays capital.

Capital-and-interest (repayment)

The UK standard. Each payment covers the interest on the outstanding balance plus a small amount of capital. Over the term, the balance steadily reduces to zero. The only format you should default to for a first home.

Joint Borrower Sole Proprietor (JBSP)

Up to four borrowers on the mortgage but only one on the title. Typically used by parents to boost a child's borrowing capacity without triggering the 5% additional-property SDLT surcharge (because the parent is not a property owner on this purchase — they're just on the debt).

Key point: every named borrower is jointly and severally liable for the whole debt. If the child defaults, the parents pay. It's a commitment, not a gesture. Main UK JBSP lenders: Barclays, Skipton, Clydesdale, Tipton & Coseley, Furness.

Guarantor

A family member guarantees the loan (or deposits funds as collateral) without being on the mortgage itself. Mostly replaced by JBSP and specific "family mortgage" products like Barclays Family Springboard and Tipton Family Assist, where the family member's savings sit in a linked account for a fixed period.

These products are niche but useful: they allow a 100% LTV purchase in exchange for a family member locking away (usually) 10% of the price for 3-5 years. Worth considering when the buyer has strong income but no deposit and the family has savings they can temporarily immobilise.