Your mortgage is probably biggest loan you will ever take out, so it is important to get a mortgage with an interest rate that suits you. This will depend on various factors like type of mortgage selected, your personal circumstances and your plans for future.

Get independent financial advice before you choose a mortgage. It's an area where you'll probably find expert financial advice helpful.

Capped rate

This is another special limited term arrangement where, although your payments can go up and down, they are guaranteed not to rise above a certain level. So you will benefit from interest rate falls during capped rate period. When arrangement finishes, you will then pay lender's standard variable rate.

Discounted rate

Once again interest rate will vary, but you will pay a rate less than lender's standard variable rate. As you might expect, such beneficial treatment can't last forever and after a limited period of time, you will pay lender's standard variable rate.

A repayment mortgage is one for which each monthly payment contributes to capital and interest that is to be repaid over term of mortgage. Assuming that contractual payment is made each month for full term of mortgage, at end of term mortgage will be fully repaid.

With a repayment mortgage your monthly payments consist of both capital amount borrowed together with accrued interest. Your lender will keep you advised about how much you have repaid.

Initially, most of your monthly payment pays off interest and what's left goes towards reducing what you've actually borrowed. As time goes on, ‘balance' changes and as interest charges reduce, more and more of your monthly repayment is used to reduce loan.