The right mortgage isn’t quite as simple as choosing the deal with the best interest rate. The type of mortgage you need depends on your financial situation, your future plans and the type of property you’re looking to buy. Fixed rate mortgages With a fixed rate mortgage, your repayments are guaranteed to stay the same for a set term, usually two or five years. The advantage of a fixed interest rate is this security – knowing that your mortgage payments will stay the same for a certain length of time. Fixed rates are sometimes higher than variable rates, but that’s not always the case. The main disadvantage of them is that you won’t benefit from a reduction in costs if interest rates fall. Variable rate mortgages If you’re on a variable rate mortgage, your monthly payments can change, because your lender can change the rate of interest it charge you. That can make it more difficult to budget for. Variable rate mortgages will generally change when the Bank of England changes its base rate. Interest rates and fees for variable mortgage deals can sometimes be lower than for fixed rates. There are a few different types of variable rate mortgages: Standard variable rate (SVR) mortgage – your lender’s standard interest rate for mortgages. You’ll be moved onto this at the end of a time-limited mortgage rate if you don’t switch and it’s likely to be much higher than the rate offered on a new deal. Discount mortgages – your interest rate tracks your lenders standard variable rate minus a set percentage. If your lender’s SVR goes up by 1%, the rate you pay will go up by 1% as well. Tracker mortgage – your interest rate tracks the Bank of England base rate plus a set percentage. So if it reduced by 1%, your mortgage interest rate will also reduce by 1%. Offset mortgages An offset mortgage links your savings to your mortgage and 'offsets' their value against the loan balance. In practice, this means you'll pay less interest on your mortgage. For example, if you had a mortgage of £100,000 and savings of £20,000, you’d only pay interest on £80,000 of your mortgage. But it also means your actual savings won't earn any interest and you might not have unrestricted access to your money. An offset mortgage can make sense when mortgage rates are high or savings rates are very low.