How does it work - Your payments move up or down with the lender's own mortgage rate, which is usually driven by the Bank of England's base rate.

Early repayment charges - Not usually, but check and see. Usually you can leave your lender without any penalties or problems.

What does it mean for you? You're in control. You can usually pay back extra amounts (and cut your interest costs) without a penalty. It moves with interest rates. So if interest rates go up, so will your monthly payment. It will almost certainly be expensive compared to other deals. The lender may not reduce, or may delay reducing, their variable rate even if the Bank of England rate goes down.

How does it work - Your monthly payments can go up or down, but you get a discount on the lender's standard variable rate for a set period of time. At the end of the deal, you usually change over to the standard variable rate.

Early repayment charges - During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.

What does it mean for you? It gives you a gentler start to your mortgage, at a time when money may well be tight. But you must be sure you can afford the payments when the discount ends.  The discount period is limited, so don't get used to those early low repayments. You may not be able to make overpayments and pay off the loan early without penalties. The lender may not reduce, or may delay reducing their variable rate even if the Bank of England rate goes down.

How does it work - Your payments are set at a certain level for an agreed period. At the end of that period, they'll usually switch you to the standard variable rate.

Early repayment charges - During the special deal period: yes, almost always. They can apply even after the special deal period, too.

What does it mean for you? - Your payments will stay the same in that period, even if interest rates go up. This gives you the security of knowing that you can afford your payments and will make it easier for you to budget. If rates go down, you won't benefit. Your payments will stay at the higher rate.
You may not be able to make overpayments and pay off the loan early without penalties.

How does it work - A variable rate loan with an interest rate that's at a set amount above or below the Bank of England or some other base rate, set independently from the lender. It tracks (moves up or down with) that rate.

Early repayment charges - Sometimes during any special deal period and maybe even after the period too.

What does it mean for you? It can pay to go for a tracker if you can afford to pay more when interest rates go up, in exchange for benefiting when they go down. It's not a good choice if your budget won't stretch to higher monthly payments.

How does it work - Your payments are variable and often linked to a base rate, but fixed not to go above a set level (the 'ceiling' or 'cap') during the period of the deal. At the end of the period, you are usually charged the lender's standard variable rate.

Early repayment charges - During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.

What does it mean for you? You know the maximum you will pay for a set period of time. Useful if you want the security of knowing that your payments can't rise above the set level, but still benefit if rates fall.

How does it work - Can be used in conjunction with a capped rate and/or a tracker. The payments are variable but will not fall below a set level (the 'collar').

Early repayment charges - Not usually, unless it is used in conjunction with a capped rate and/or a special deal tracker rate.

What does it mean for you? It may be part of another interest-rate deal which otherwise appears attractive. But if the rate payable is only just above the 'collar' and you think rates will fall, you may not get the full benefit of a reduced payment.