Types of Mortgage

There are two main "types" of mortgage available in the UK. These are:

• Interest only mortgages and
• Repayment mortgages.

There are also mortgages that combine these two together, allowing the borrower to pay only interest in the early stages of the mortgage and pay more of the capital as the mortgage term goes on. These are known as low start mortgages.

As well as these two main types of mortgage there are several other mortgage products available, which can also be combined:

• Cash back mortgages;
• Flexible mortgages;
• Offset mortgages and
• Current account mortgages.

These can be combined in different ways. For instance some lenders may offer cash-back on an offset mortgage, and most mortgages today are flexible, so many lenders will offer flexible current account mortgages for example.

There are also these three types of interest only mortgage:

• Endowment mortgage
• Pension linked mortgage
• ISA mortgage

Mortgage lenders also offer these types of mortgage for a short period at the start of mortgage terms to attract new customers. These types of mortgage rates usually last for between 1 and 5 years:

• Capped rate mortgage
• Discount rate mortgage
• Fixed rate mortgage
• Base rate tracker mortgage
• Deferred rate mortgage