Choosing a mortgage can be confusing. With different types of products and rates available, where do you start? In this section we clearly explain the different types of mortgages in order to help you work out what is best for you.

How fixed rate mortgages work

You choose a number of years to fix your rate for – usually two, three or five. For this fixed period, your monthly payments will stay the same. After your fixed rate period you move onto the Santander Follow-on Rate (variable).

A fixed rate mortgage might suit you if:

  • you prefer to know exactly what you need to pay month to month during the fixed rate period.

Pros
With a fixed rate mortgage you can budget for a set period of time.

If the Bank of England base rate goes up and you’re still in your fixed rate period, your monthly payments won’t increase.

You can overpay up to 10% of your fixed rate loan amount each calendar year (January to December) without paying an early repayment charge.

Cons
If the Bank of England base rate goes down and you’re still in your fixed rate period, your monthly payments won’t decrease.

If you repay or want to move your mortgage during the fixed rate period, you’ll most likely pay an early repayment charge.

How tracker rate mortgages work

You choose a mortgage with an initial rate period and during this period your rate tracks above the Bank of England base rate. The initial rate period is usually two or three years and after that you move onto the Santander Follow-on Rate (variable).

A tracker rate mortgage might suit you if:

  • you think the Bank of England base rate will stay low or get lower but, in the event it did increase, you would be able to cover any increase in your monthly mortgage payments
  • you think you might want to make unlimited overpayments on your mortgage to be mortgage-free quicker.

Pros
If the Bank of England base rate goes down during your initial rate period, your payments for your tracker rate mortgage will go down too.

You can make unlimited overpayments on our tracker rate mortgages without paying an early repayment charge.

Cons
As the rate tracks above the Bank of England base rate, if the base rate increases so will your monthly payments. You need to be comfortable your budget will allow an increase in your monthly payment.

How Lifetime Tracker mortgages work

With a Lifetime Tracker mortgage your rate will track above the Bank of England base rate for the life of your mortgage term.

A Lifetime Tracker mortgage might suit you if:

  • you don’t want to ever look for a new mortgage deal again
  • you think the Bank of England base rate will stay low or get lower but, in the event it did increase, you would be able to cover any increase in your monthly payments
  • you think you might want to make unlimited overpayments on your mortgage to be mortgage-free quicker.

Pros
If the Bank of England base rate goes down during your mortgage term, your payments for your tracker rate mortgage will go down too.

You can make unlimited overpayments on our lifetime tracker rate mortgage without paying an early repayment charge.

Cons
As the rate tracks above the Bank of England base rate, if the base rate increases so will your monthly payments. You need to be comfortable your budget will allow an increase in your monthly payment.

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