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Types of mortgage

This guide aims to help you understand mortgages better and is in three parts. In part three, we give an overview of the different types of mortgage available.

Man in coffee shop

It is easy to feel overwhelmed by the complexity of different mortgage providers and products.

Fortunately, once you know the basics you will be able to narrow down your choices and make a sound decision. This guide is in three parts. In this third part, we give an overview of the most common types of mortgages available.

How do I choose the right mortgage for me?

When taking out a mortgage, good planning is essential. Don’t make a rushed decision as whatever you decide today will impact your finances for years to come.

There are a number of things that you will need to consider to ensure that you find the right mortgage to suit your circumstances. Not only will you need to look at the total amount you will need to repay over the term of the mortgage, you will also need to consider:

  • the different types of monthly repayment
  • the different types of mortgage interest rate

Types of monthly repayment

Types of mortgage interest rate

Your monthly repayment amount will depend on two factors: the amount you borrow and the interest rate you borrow at. 

As such, you will want to find a mortgage interest rate that not only suits your current financial situation, but which fits with how you see your finances developing in the future.

Should I get advice on my mortgage?

Getting the best mortgage deal to suit your circumstances will mean shopping around. But as mortgages can be complex and involve many factors, comparing your options can feel overwhelming. This is why many people turn to the help of a mortgage adviser (or financial adviser).

Please be aware that advisers usually charge for their services.

Not only will they be able to guide you on what to look out for, but they will recommend products based on your specific situation. A mortgage adviser will have knowledge and experience of using different lenders and will be aware of the best deals in the market at any given moment. They will also be able to explain the pros and cons of using different mortgage providers.

As they have access to a wide range of different mortgages to help you decide on the best option, you receive peace of mind that you’re making the best decision. On the other hand, applying for a mortgage direct from a lender (bank, building society or specialist) means you can only select from their product range.

As an added benefit you might be able to tap into an adviser’s network of contacts that can provide the other services you might need when buying a home – from solicitors through to the appropriate insurance.