LTV stands for Loan to Value. This calculation is used to show the difference between the value of the property and the mortgage taken out to buy it. It is also used to calculate deposits. So, for example, if a borrower has ?20,000 to use as a deposit on a purchase of a house that costs ?100,000 then they will need to borrow ?80,000. The LTV calculation is the loan divided by the price -- here that would be ?80,000 divided by ?100,000 so the LTV would be 80%. LTVs are often used by lenders as a guide to deals -- for example the 5.69% deal outlined earlier has a maximum LTV of 75%.

If a borrower tries to change their deal or repay their mortgage when committed to a fixed rate deal then the lender will usually charge an Early Redemption Penalty. Some fixed rate deals have penalty periods that exceed the actual length of the fixed term deal. In most cases these fees are calculated as a percentage of the mortgage taken out and will usually decrease during the duration of the deal year on year.

Fixed rate deals often suit first time buyers or people who need to work to a specific budget. The advantage here is that the mortgage payment will remain the same every month so it is easier to budget. And, if base rates go up, the mortgage payment will not reflect these rises and will stay the same.

But, if base rates fall, this will also not change the mortgage payment which could leave the borrower paying more than they need to every month. And, of course, if they try to change deals they may well have to pay the penalty fees.

Do as much research and preparation as possible before choosing the right deal.