Mortgage rates
One of the most important factors when choosing a mortgage is the interest rate and how it is calculated. The interest rate depends largely on the Bank of England base rate and, in principal, is fairly easy to understand. Unfortuantely, the way mortgage rates are calculated and follow the base rate over time are varied and complicated.

The base rate
The base rate is the rate of interest set by the Bank of England. It is used by the Governor of the Bank of Enlgand and the Monetary Policy Committee to manage the economy and is therefore subject to frequent changes.

Mortgage rates are highly dependant on the base rate and vary considerably from month to month or year to year with the base rate.

Calculations
Mortgage rate calculations depend on two factors. Firstly, how often the lender calculates the interest - some lenders calculate interest daily and some yearly. Secondly, how the mortgage rate follows the base rate. The most simple example of this is the tracker mortgage with which you pay a fixed margin over the base rate. Other mortgage deals include variable, fixed, discounted, cashback and capped, which vary in complexity.

Comparing mortgage products
Comparing mortgage rates is difficult even with relatively simple products. Trying to compare rates between some of the complex rates on offer is nearly impossible. Fortunately, there are two indicators which make these comparison slighly more simple. These are the annual percentage rate (APR) and the internal rate of return (IRR).