Standard repayment mortgage (variable)

A variable rate repayment mortgage is the most common type of loan. The interest rate goes up and down during the lifetime of your mortgage, broadly in line with interest rates in the economy as a whole.

This means that when the interest rate goes up, the amount you have to pay also goes up. When the interest rate falls, your payments come down.

When interest rates change, some lenders immediately adjust the amount they charge borrowers. Other wait until the end of their financial year before making the change.

Some lenders offer a way of levelling out interest rate changes over the year The interest rate goes up and down in exactly the same way, but your payments change only once a year.

This usually doesn't save you any, money (or cost any more) in the long run, but it does make it easier to budget for the year ahead.

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