Below is a brief guide to the different types of mortgage rates available to take out. Remember to always get professional advice before committing to a mortgage from a experienced mortgage broker.

Most lenders offer a type of variable rate mortgage where the interest rate is linked to the Bank Rate. This set each month by the Bank of England's Monetary Policy Committee (MPC).

Base Rate tracker mortgages are charged at a set margin over the bank rate for the period of the loan. Typically, the rate charged will be the bank rate plus one per cent.

The advantage of this mortgage is that the lender cannot raise its margin and charge a penal interest rate. The disadvantage of a base rate tracker is that every time the bank rate goes up, the borrower's mortgage rate and monthly payments increase automatically variable base rate trackers come with no early repayment charges, so you can switch to another product at any time.

Pros

•  The mortgage is Completely transparent

•  Mortgage cost falls instantly and automatically when Base Rate falls

Cons

•  Not the cheapest deals on the market

•  Mortgage cost rises instantly and automatically when Base Rate increases

These trackers cone with an initial discount, typically for anything from three months to two years. After the discount period, the rate you pay reverts to the agreed tracker rate, and you can be tied in with early repayment charges for anything up to five years.

You can fix your rate for two years and at the end of that period, the rate you pay then reverts to a tracker, set at a certain margin above the bank rate. This gives you the security and peace of mind of a fixed rate in the early years, and the reassurance that you will be paying a fair rate further down the line, as all lenders' variable rate products are based on the bank rate at any given time.