Whether you’re buying your first home or reviewing your options later in life, understanding the different types of mortgages available in Leicester can help you choose a setup that works for your situation.
From fixed-rate deals to more flexible arrangements, your choice of mortgage affects not just your repayments, but also your long-term financial planning.
Some options may be better suited to first time buyers, while others are tailored for clients aged 50 or over.
As a mortgage broker in Leicester, we’ll walk you through the key differences so you can decide what fits your needs best.
Popular Types of Mortgages
Fixed Rate Mortgages
Fixed rate mortgages are one of the most popular choices for buyers and those remortgaging in Leicester.
With this type of mortgage, your interest rate stays the same for a set period, so your monthly payments won’t change, even if the Bank of England base rate goes up or down.
Typical fixed terms include 2, 5, or 10 years, although some lenders offer shorter or longer options. Once your fixed period ends, you’ll need to remortgage to a new deal.
If you don’t, your mortgage will usually move onto the lender’s standard variable rate, which is often more expensive.
Fixed rate mortgages offer stability, making them a common choice for first time buyers who want predictable payments in the early years of owning a home.
Tracker Mortgages
Tracker mortgages are linked to the Bank of England base rate, plus a set percentage added by the lender.
For example, if the base rate is 5.25% and your tracker deal is set at base rate plus 1%, your mortgage rate would be 6.25%.
If the base rate changes, your payments will rise or fall accordingly, unless the mortgage includes a ‘collar’, which limits how low the rate can drop.
Most tracker mortgages come with an initial deal period, usually around two years.
After that, unless you remortgage, you’ll move onto your lender’s standard variable rate (SVR), which is generally higher.
Tracker mortgages can suit buyers in Leicester who are comfortable with a changing monthly payment and want to benefit if interest rates fall during the deal period.
Discount Mortgages
A discount mortgage is a type of variable-rate deal where you pay a reduced rate compared to your lender’s standard variable rate (SVR).
For example, if the SVR is 5% and your deal includes a 2% discount, your interest rate would be 3%.
As the SVR changes, your payments will go up or down, so monthly costs aren’t fixed.
These deals usually last for an introductory period, often around two years.
Once that period ends, you’ll revert to the lender’s SVR unless you remortgage.
Discount mortgages can work well for buyers in Leicester who want lower payments to begin with, but are also comfortable with the possibility of rate changes during the term.
Standard-Variable-Rate (SVR) Mortgages
Each mortgage lender sets their own standard variable rate, known as the SVR.
This rate is typically higher than what you’d get on a fixed, tracker, or discount mortgage deal.
SVRs aren’t directly tied to the Bank of England base rate, but they are influenced by it. If the base rate increases, lenders may choose to raise their SVR, though they’re not obliged to do so.
Some may pass on the change in full, while others may adjust it differently or not at all.
SVRs tend to move less frequently than tracker rates but are still unpredictable.
Most borrowers in Leicester end up on an SVR after their initial mortgage deal ends, unless they remortgage to a new product.
Because SVRs are usually more expensive, we’ll always review your options before letting a mortgage roll onto one.
Which Type of Mortgage is Better?
Deciding between a fixed rate and a variable rate mortgage depends on your personal plans and how much payment certainty you’re looking for.
A fixed rate mortgage gives you predictable monthly payments for a set number of years.
This can be ideal if you prefer stability, are budgeting carefully, or plan to stay in your home for the long term.
Variable rate mortgages, including tracker and discount deals, often come with lower initial rates and the potential to save if interest rates fall.
The trade-off is that your payments can go up if rates rise, so they carry more risk.
Your decision should factor in how long you expect to stay in the property, current interest rate trends, and how much flexibility your finances can handle.
Other Types of Mortgages
Interest Only and Repayment Mortgages
When you take out a mortgage, it will be set up as either interest-only or repayment, and the difference affects how your loan is paid off over time.
With an interest-only mortgage, you only pay the interest each month. The original loan amount stays the same, and you’ll need a separate plan to repay it in full at the end of the mortgage term.
This option is less common and usually suited to specific situations, such as borrowing at age 50+ or where there’s a clear repayment strategy in place.
A repayment mortgage is the standard route for most buyers in Leicester.
Each monthly payment includes both interest and part of the loan balance, gradually reducing what you owe.
By the end of the term, the mortgage is fully paid off, assuming all payments are made.
If you’re unsure which route fits your plans, a mortgage broker in Leicester like ourselves will explain what’s available based on your income, goals, and lender criteria.
Joint Mortgages
If you’re buying a property with someone else, whether that’s a partner, friend, or family member, you’ll be applying for a joint mortgage.
Both applicants will be named on the mortgage agreement and the property deeds.
This means you’ll be jointly responsible for the repayments, and your combined income will be used to assess how much you can borrow.
Joint mortgages are a popular option in Leicester, especially for first time buyers looking to boost affordability or share the financial responsibility of homeownership.
Offset Mortgages
Offset mortgages link your mortgage with your savings or current account, helping to reduce the amount of interest you pay over time.
Instead of earning interest on your savings, the balance is offset against your mortgage.
This means interest is only charged on the difference.
For example, if you have a £150,000 mortgage and £20,000 in savings, you’ll only pay interest on £130,000.
Offset mortgages can help you pay off your loan sooner and reduce your overall interest bill, without locking away your savings.
You can still access your funds if needed, giving you more flexibility than many other mortgage types.
They tend to suit buyers in Leicester who have regular savings or want to make their money work harder while keeping some access to it.
Guarantor Mortgages
A guarantor mortgage allows a third party, usually a parent or close family member, to support your application by agreeing to cover the repayments if you can’t.
This setup can help if you’re struggling to get a mortgage on your own, whether due to low income, a small deposit, or previous credit issues.
The guarantor’s income and assets are factored into the application, which can increase how much you’re able to borrow.
While this can be a useful route into homeownership, it places financial responsibility on the guarantor.
If payments are missed, they’ll be expected to step in.
Guarantor mortgages are still available from certain lenders and may be worth exploring for buyers in Leicester who need support from family to get started.
Date Last Edited: December 15, 2025
