There are several different types of mortgages available, and the right one will depend on how you want to repay what you borrow, how much certainty you want around your monthly payments and your wider circumstances.
Some mortgage types determine how the interest rate behaves, such as fixed rate and tracker mortgages.
Others describe how the mortgage itself is repaid, including repayment and interest-only mortgages.
Understanding these differences can make it easier to compare your options before choosing a mortgage in Lincoln.
What is a Fixed Rate Mortgage?
A fixed rate mortgage keeps your interest rate the same for an agreed period, meaning your monthly mortgage payments will remain consistent during that time.
Fixed periods are available for different lengths, with two and five-year deals being common choices. Longer fixed rate periods are also available from some lenders.
The main benefit is certainty. If interest rates rise during your fixed period, the rate you pay will not increase.
Equally, you will not benefit from a reduction in your mortgage rate if market rates fall while you remain tied into the deal.
Leaving a fixed rate mortgage before the agreed period ends can also result in an early repayment charge, depending on the terms of the product.
For first time buyers in Lincoln who are budgeting for mortgage payments for the first time, knowing exactly what will leave the account each month can be particularly useful.
What is a Tracker Mortgage?
A tracker mortgage has a variable interest rate that follows another rate, commonly the Bank of England base rate, plus a percentage set by the mortgage lender.
If the rate being tracked rises, your mortgage rate and monthly repayments can increase. If it falls, your payments could decrease.
For example, a tracker set at one percentage point above the Bank of England base rate would move as the base rate changes rather than remaining fixed for a set period.
Some tracker mortgages have early repayment charges, while others provide greater flexibility to change deals. The terms can vary between lenders, so the rate itself is only one part of the product to consider.
What is a Repayment Mortgage?
With a repayment mortgage, each monthly payment goes towards both the interest charged and the amount you originally borrowed.
Provided all required payments are made throughout the mortgage term, the balance should be fully repaid by the end.
During the earlier years, a greater proportion of each payment will generally go towards interest because the outstanding mortgage balance is higher.
As the balance reduces, more of the monthly payment goes towards repaying the capital.
Repayment mortgages are widely used for residential properties and provide a clear route towards owning the property without a mortgage at the end of the agreed term.
Our mortgage advisors in Lincoln can show you how different mortgage terms and interest rates could affect the monthly repayment and overall amount you pay.
What is an Interest-Only Mortgage?
With an interest-only mortgage, your monthly payments cover the interest charged on the mortgage rather than reducing the amount originally borrowed.
This means you need an acceptable repayment strategy for clearing the outstanding capital at the end of the term.
Interest-only mortgages remain common within buy-to-let mortgages in Lincoln, while residential lenders generally apply stricter criteria.
Acceptable repayment strategies can vary and may include investments, pensions, savings or selling another property, depending on the lender.
Selling the mortgaged property may be accepted in some circumstances, such as where there is sufficient equity and a realistic plan to move to a less expensive home.
The lower monthly payment should therefore not be viewed in isolation. The original mortgage balance will still need to be repaid, and the lender will want to see that your chosen strategy is credible.
What is an Offset Mortgage?
An offset mortgage links your mortgage to an eligible savings account, with the savings used to reduce the balance on which mortgage interest is calculated.
For example, if you had a £200,000 mortgage and £30,000 held in the linked savings account, interest could be calculated on £170,000 rather than the full mortgage balance.
The savings are not normally used to physically repay the mortgage, so you can retain access to them subject to the terms of the account.
If you withdraw money, the amount of the mortgage being offset reduces and you will pay interest on a larger balance again.
This can be useful for borrowers who hold substantial savings and want those funds to work alongside their mortgage while retaining access to the money.
Offset mortgages are offered by a smaller selection of lenders, so it is worth comparing the potential interest saving against the rates and terms available on other mortgage products.
Which Type of Mortgage is Right for Me?
The right mortgage type depends on more than finding the lowest advertised interest rate.
How long you expect to keep the mortgage, the stability of your income, the level of savings you hold and how comfortable you are with changing monthly payments can all influence which option makes sense.
There can also be differences in product fees, early repayment charges and lender criteria that affect the overall suitability of a deal.
Speaking to a mortgage broker in Lincoln gives you the opportunity to compare the mortgage types and products available for your circumstances before deciding how you want to structure your borrowing.
Date Last Edited: 07/09/2026
