An indication of the competitivness of the UK mortgage market can be seen by the fact that a plethora of mortgage products has emerged on to the scene in recent years.
You've probably heard of some of these - base rate tracker mortgages, capped, discounted mortgages and so on.
They're all designed with one aim in mind, to pull in business. Make them appear attractive enough by offering incentives and you'll sign up.
But, stripped down, they're usually variations on the same couple of themes, based either on the capital-and-interest repayment mortgage or the interest-only mortgage with repayment vehicle.
A discounted mortgage, as the name implies, involves an initial reduction in the interest rate that would normally be charged. The discount could be something like 1% or 2% over two or maybe three years, amounting to a real saving for the borrower.
Popular with first-time buyers, a fixed-rate mortgage 'fixes' the interest payment for a number of years (anything from one to five years). Interest then reverts back to the lender's current rate.
A capped-rate mortgage sets an interest-rate 'ceiling' (and maybe a fixed lower limit, too). If the lender's variable rate goes above this, the borrower will not pay any more.
The base rate tacker mortgage 'tracks' the base rate set by the Bank of England and provides borrowers with a greater sense of security amid the ups-and-downs of the financial world.
The base rate is essentially the cost of borrowing from the Bank of England and is reviewed by it every month.
Although lenders reflect the changes in base rate, they will typically charge a premium on top of about 1%.
