An interest-only mortgage allows you to repay just interest on your loan, but you have to take out an investment that will mature to pay off outstanding amount. With an interest only mortgage you'll normally also have to pay into another savings or investment plan that'll hopefully pay off loan at end of term.

A lender might require you to take out life insurance to pay off your mortgage should you die. You can choose from basic ‘term assurance' with low monthly payments that stop when your mortgage term ends. You can also get insurance to protect your income or just your mortgage payments if you become ill or disabled, or lose your job.

If you cannot meet your mortgage payments you should contact your lender as soon as you realise that you have a problem. Although your mortgage is secured on your home, lenders see repossession as last resort: they stand to make more money from your mortgage than sale of your home.

Lenders will work out a plan with you to reduce your payments for a time or stop them temporarily, and work out a new term for your mortgage. It is wise to remember that your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

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Fixed mortgages

With a fixed rate, your payments stay same no matter what happens to base rate. This is a sensible option for people who want to know exactly what they will be paying for a certain period. There is always a risk that, if interest rates fall, you might be left paying an uncompetitive rate. On other hand, a rise in rates will leave you paying less than people on other schemes.

Tracker mortgages

This type of mortgage follows Bank of England base rate. It will usually stay a set margin above base rate for duration of loan. They are suitable for people who think base rates might be on a downward trend.

Capped mortgages

These schemes are similar to fixed rate mortgages, but give you a get-out if rates fall sharply. They allow you to pay either capped rate or lender's standard variable rate, whichever is lower. They can initially be slightly more expensive than other deals, but if rates fall they can pay off.

Offset mortgages

They will link your current account and your mortgage. You pay your salary into an account and your mortgage payment is taken out as per usual. But any extra cash in account is also used to offset against amount you owe on mortgage, so you pay less interest.

Flexible mortgages

Another way of managing your mortgage is through a flexible arrangement. This allows you to pay more money off your mortgage when you have it, or take a payment holiday if things are a bit tight. Some lenders will allow you to overpay each month and withdraw extra cash if you need it later. And if you have money, you can pay off your mortgage early. Any money you can pay off early will save you interest payments.

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