The most popular mortgage types in the UK are the fixed rate and discounted mortgages.
Fixed Rate Mortgages
Fixed Rate Mortgages are exactly what they sound like: mortgages that have a fixed interest rate that is paid for an agreed period of time. Typically, the longer period of time for which a mortgage rate is fixed, the higher the interest rate that is paid by the borrowers. Because the fixed rate mortgage market is competitive, it can sometimes be possible to find interest rates that are comparable for two, three and five year plans.
Discounted Mortgages
The discounted mortgage is a mortgage that is offered to the borrower at a discount off of the Standard Variable Rate that is usually offered by the lender. Typically the shorter the mortgage length the bigger discount that becomes available. Discounted mortgage interest rates are some of the lowest rates available on the mortgage market. Because the rate of the discount isn’t attached to a fixed interest rate, as the interest rates fluctuate on a mortgage, so will the borrower’s payments.
There are other types of mortgages available, but fixed rate and discounted mortgages are the two most popular mortgage types among UK borrowers.