There are different types of mortgage and it can get confusing deciding which the right mortgage is for you there are many good independent mortgage advisors, it is wise to take advice.

100% Mortgage

A 100% mortgage offers you a borrowing of 100% of the value of the property, i.e. no deposit is required. Rates may be fixed, variable, discounted or capped (see these product guides for more information). Opting for a 100% mortgage means that you could risk facing a negative equity situation if house prices fall. You may also be charged an above-average interest rate and a mortgage indemnity premium.

Base Rate Tracker Mortgage

A base rate tracker mortgage will be based on the Bank of England base rate and a possible loading for a set period or for the term of the loan. The rate payable will alter in line with any change to the Bank of England base rate. This means that you cannot predict the monthly cost of the borrowing, which could cause financial concerns within the mortgage period. In times of falling interest rates variable Rate Mortgages are beneficial, as your mortgage repayments will reduce. However, if interest rates rise, then so will repayments.

Capped Rate Mortgage

A capped rate mortgage has a maximum interest rate for a given term. The interest rate you pay cannot go higher than the agreed capped rate; thus you know the maximum amount your monthly repayments could rise to. However, if the basic interest rate falls below the capped rate, repayments will also reduce. Sometimes these capped rate mortgages also have a ‘collar’. This means the lender has set a minimum level below which the rate you pay will not fall.

Cashback Mortgage

A cashback mortgage provides a cash rebate on completion of the purchase. The sum is either a percentage of the advance or fixed. This cashback could help you to cover some of the expenses of setting up home, but this bonus is often subject to higher repayment rates and may include penalties for repaying the loan early. Cashback may be offered on fixed, variable or capped Rate Mortgages. See these guides for more information.

Currant Account Mortgage

A current account mortgage lets you operate your mortgage borrowing through a current account. In effect, it is like having a large overdraft. If you had a mortgage of £100,000 and £1,000 credit in your account your balance would show as £99,000 in the red. You may be required to pay your salary into these accounts.

These mortgages can let you pay off your mortgage early as any cash going into the account, such as salary, reduces your outstanding debt. If you are disciplined you can save on the amount of interest you repay and the length of your mortgage.

Many mortgage lenders show you on a regular basis whether you are ‘on track’ or above / below track with your payments.Some current account mortgage providers also allow loans to be attached to these mortgage accounts, with interest charged at the same rate as the mortgage. This means all your debts are held centrally in one account.

First Time Buyers Mortgage

These are mortgages open to for first time buyers only.

A discounted mortgage gives you reduced repayments for a certain amount of time. The lender gives a discount from their standard variable rate.

For example, the variable rate may be 5% with a discount of 1%, making your initial interest repayment rate 4%. If the variable rate on which your discount rate is based falls, your repayments will fall. however, if the lender's standard variable rate rises, so will your repayments.

Discounted Mortgage

A discounted mortgage offers you reduced repayments for a given term. The lender gives a discount from their standard variable rate.

For example, the variable rate may be 5% with a discount of 1%, making your initial interest repayment rate 4%. If the variable rate on which your discount rate is based falls, your repayments will fall. however, if the lender's standard variable rate rises, so will your repayments.

Whilst a discounted rate may be helpful initially, you should consider how much your repayments will be when the discounted period ends. Often with discounted rate deals there will be a penalty if you change your mortgage or pay it off before the term ends. This is known as a redemption tie in. The amount of the penalty is usually a percentage of the outstanding mortgage. The earlier you opt out of the mortgage the more you will have to pay. This can equate to thousands of pounds. Some discounted deals have extended tie ins meaning the penalty extends past the initial deal rate period.

Buy to Let Mortgage

Buy-to-let mortgages are provided for property purchases or remortgages for investment in the private rental sector. How much you can afford to borrow can be based on how much you earn or the amount of rent expected from the property. Some lenders may also take your existing mortgage or other loans into consideration.

Buy-to-let mortgages can be fixed, capped, discounted or variable. Some may be base rate trackers, or have cashbacks and flexible features.

With a variable rate buy to let mortgage the amount you repay increases or decreases in line with interest rate changes. This means that you cannot predict the monthly cost of the borrowing. In times of falling interest rates variable rate mortgages are beneficial, as your mortgage repayments will reduce. however, if interest rates rise then so will repayments.