Mortgage Rates

Interest applies to any debt, and mortgages are no exception. The mortgage rate is the rate of interest applied to your loan by the lender. All lenders offer different rates.

Interest is essentially the cost of loaning money. The rate of interest determines the size of that cost. The lower the rate, the smaller the cost to you.

Mortgage rates available to the public are based on what the lenders themselves have paid for the funds, and the biggest source of funds is the Bank of England. This is why the rate at which the Bank of England charges is known as the ‘Base Rate’.

Mortgage Product Borrowing Rate
Buy to Let From 3.69%
Let to Buy From 4.29%
First Time Buyer From 4.09%
Commercial From 7.99%
Subprime From 5.25%
Equity Release From 5.74%

The Mortgage Rate will affect how much money you end up paying back in total and will also affect your monthly mortgage repayments

Your rate affects your mortgage as follows;

Capital = The mortgage funds you have borrowed.

Interest = The extra cost added to borrowing capital.

Interest Rate = The size of the interest cost.

There are two types of mortgage rates: fixed rates and variable rates.

Fixed Rate: You lock in an agreed rate for an agreed term, for example, 1.8% for three years; as a result, your monthly repayments remain the same for this period of time. The benefit of this scenario is that you can budget for your payments. It is also favourable if you think rates are likely to increase.

Variable Rate: Your interest rate fluctuates in accordance with the base rate, and therefore so do your repayments. The obvious advantage here is that if the rate falls, then your repayments drop, but conversely, if the rate increases, your repayments increase.

Use our mortgage calculator to get an indication of costs and mortgage rates.