Which rate is best for me ?

Here is quick explanation of the various options and some pointers to think about. Bear in mind that what looks like a cheaper mortgage today may not prove to be so in the long run.  Make sure you know what happens after any special deal ends.

Variable rate mortgages

Standard variable rate mortgage - Your monthly payments will go up or down when the lender's mortgage rate changes. Mortgage rates tend to move in line with the Bank of England base rate, which is reviewed monthly.

A tracker mortgage -  With a tracker mortgage the interest rate is a set amount above or below the Bank of England or some other base rate. It always 'tracks' changes in that rate.

A discounted interest rate mortgage - In this case your payments are variable, but they are fixed at less than the lender's standard variable rate for a set period of time. At the end of this period, you are usually charged the lender's standard variable rate.

With cashback - You receive a sum (usually between 3 and 5% of the amount borrowed) shortly after you take up the loan.  You will normally have to repay some or all of the cashback if you repay the mortgage in the early years.

Is a variable rate mortgage right for me ?

Upsides:

You benefit from any decreases in interest rates, which may mean your monthly payments go down.
You will usually have the flexibility to make overpayments without penalty (assuming there are no restrictions on making such payments and no early repayment charges apply). 

Downsides:

If interest rates rise, your monthly payments go up.
 
With a discounted mortgage, remember to think about what your monthly payments will be at the end of the discounted period, including potential increases in interest rates. 

Fixed interest rate (limited period) mortgage

Your payments are fixed at a certain level for a set period, for example two, five or ten years or maybe even longer. 

Unless the rate is fixed for the term of the mortgage, you are usually charged the lender's standard variable rate at the end of the fixed rate period.

Is a fixed rate mortgage right for me ?

Upsides:

You know exactly how much your monthly payments will be for a specified period, which can help you budget.
You are not affected by Bank of England interest rate rises for the period of the fix. 

Downsides:

If interest rates fall, your payments will still stay the same - they won't go down.  

You may not be able to make overpayments and there may be a charge for repaying the mortgage early. 

Capped rate mortgage

The interest rate for this type of mortgage is variable and often linked to a base rate, such as the Bank of England base rate. Your monthly payments will go up and down according to changes in the specified base rate.  

However, the interest rate will not rise 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.

Is a capped rate mortgage right for me ?

Upsides:

You know the maximum your monthly payments will be over a set period, even if interest rates rise above this rate. 

You will also benefit from any decreases in interest rates, which may mean your monthly payments go down. 

Downsides:

If interest rates rise, your monthly payments will increase - but not beyond the capped rate. This can make it more difficult to budget ahead than, for example, with a fixed rate mortgage.