Mortgages come in all shapes and sizes. You must decide whether you want the security of a fixed-rate with an interest rate that stays the same for a set period, or the flexibility of a tracker deal which will change in line with the Bank of England base rate.
Mortgages come in two parts: the capital, which is the money you borrow, and the interest, which is the charge from the lender on the money you owe. You must make a decision on whether you want to repay capital and interest, repay the interest only, or a combination of the two.
There are three different mortgage repayment methods:
Repayment mortgage – You make monthly repayments for an agreed term until the capital and interest have both been paid back
Interest-only mortgage – Each month, you only pay the interest on the amount you borrowed
Combined repayment and interest-only mortgages – Some lenders offer mortgages on a part interest-only and part-repayment basis, which means some of the mortgage capital requires repaying at the end of the term
For a helpful, in-depth guide, visit MoneySavingExpert’s What type of mortgage to choose?