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A variable rate is fairly self-explanatory. The mortgage lender sets the price of its variable rate and may at any point raise it or lower it; variable rates will rise when the base rate rises, but banks may set them as they like. All lenders will have a 'standard variable rate' (SVR), which is their default product that you will revert to whenever the special deal you might sign up for, say a two-year tracker, ends.

The amount you can borrow in a mortgage is measured in a 'loan-to-value' rate, or LTV, as you will see on mortgage adverts. This is just the percentage mix of deposit and loan. If you had PS20,000 cash and wanted to buy a PS200,000 house, you would have a 10 per cent deposit, and need to borrow the remaining PS180,000 to get your hands on it. That is you need to borrow 90 per cent of the property's value, or 90 per cent LTV.

Fixed rates do not alter with the base rate. You lock into a specific rate for a set period - two, three or five years normally, but increasingly ten-year fixed rates have come onto the market. Whether you go for a variable or a fixed rate comes down to how much you want to bet on base rates rising or falling.

The many other costs of buying a house When working out whether you can afford to buy you need to budget for all the many other unexpected costs that crop up along the way: stamp duty, legal costs, local authority searches, survey costs, mortgage arrangement fees, mortgage broker fees, buildings insurance, removal vans, and, only if you are selling too, estate-agency fees.