Types of interest rate:

* Variable rate - the rate varies at the discretion of the lender.

* Standard variable rate - the default variable rate the lender offers to mortgage borrowers with a standard residential mortgage.

* Tracker rate - a variable rate that is linked to an underlying public interest rate (typically Bank of England repo rate) by a predetermined margin. For borrowers the rate is often linked to the LIBOR.

* Fixed rate - the interest rate remains constant for a set period; typically for 2, 3, 4, 5 or 10 years. Longer term fixed rates (over 5 years) whilst available, tend to be more expensive and therefore less popular than shorter term fixed rates.

* Discount rate - where there is reduction in the standard variable rate (e.g. a 2% discount) for a set period; typically 1 to 5 years. Sometimes the rate is stepped (e.g. 3% in year 1, 2% in year 2, 1% in year three).

* Capped rate Mortgage - where similar to a fixed rate, the interest the rate cannot rise above the cap but can vary beneath the cap. Sometimes there is a collar associated with this type of rate which imposes a minimum rate. Capped rate are often offered over periods similar to fixed rates, e.g. 2, 3, 4 or 5 years.