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Don’t be intimidated by the jargon. The financial world is awash with acronyms and money-speak but a little explanation can go a long way in breaking down the tasks and terminology associated with the purchase of a new home. What at first might appear complicated and confusing can be made relatively straightforward.

Here are a few explanations of expressions commonly encountered.

1. SVR - standard variable rate, is an interest rate determined by lenders above the Bank of England base rate. The difference between the base rate and SVRs has widened to a typical gap today of about 2%.

An estimated 40% of mortgage holders are currently on their lender’s standard variable rate (SVR) and will be most impacted by any rate cuts or rises. It’s worth remembering that lenders are under no obligation to pass on any rate cut.

A small handful of mortgages will track a different index to the base rate, often the Libor (London InterBank Offered Rate which is the rate that banks and lenders borrow on). It can be difficult to keep track of the rates on these loans, so they tend to be less popular with borrowers.

Many short-term mortgage deals revert to the SVR after the initial offer period, which usually means increased repayments.

2. Discount mortgage - this offers a certain percentage off the lender’s SVR for a set period, usually between one and five years. As the SVR moves up or down so do repayments on a discount mortgage.

3. Capped Rate Mortgages - lender will offer a ceiling or cap, above which repayments of interest cannot rise. Should the standard variable rate of the mortgage fall below the capped rate interest rate repayments will fall accordingly.

4. Collar - Most capped rate mortgages have a clearly set minimum rate (known as the collar) to which they can fall. It is imperative that borrowers are aware of what the collar on their loan is.

5. Tracker mortgage - also work on a variable rate, this time linked to the Bank of England base rate. Sometimes they last for the length of the mortgage, sometimes for only for a short period at the beginning of the loan. Some lenders offer discounted trackers, which have a rate that is a set percentage below the base rate, while others add a percentage to the base rate. Both deals move up and down in line with any changes announced by the Bank of England. This is great when rates are going down, but when rates are rising, so will your mortgage repayments.

6. Fixed-rate mortgage - this allows you to fix the rate of interest you pay on your loan for a set period of time, usually between one and five years, although longer term fixes are available. This is useful if you are stretching yourself to afford a property, as your repayments cannot increase during the fixed-rate period. Fixed-rate mortgages can save you money if interest rates are rising, but if the base rate falls you can end up paying more than borrowers on variable rate deals.

For some of the most competitive mortgage rates available in the UK, take a look at Alliance and Leicester. NatWest also come as a recommended supplier of mortgages.