A mortgage is a loan you take out to buy property. You can get a mortgage direct from lender such as banks, building societies and specialist mortgage lenders.

Your mortgage is probably biggest loan you will ever take out, so it is important to get a mortgage that suits you. This will depend on your personal circumstances and your plans for future. Many mortgages have hidden drawbacks. Get independent advice before you choose a mortgage.

There are two basic types of mortgage, interest-only and repayment. The option you choose is determined by way you want to repay your loan. There is no hard and fast rule about which is better. It is a matter of individual preference.

Interest only

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. If your investment performs well then you may have some money left over after paying back your mortgage. But there is also a risk that investment will under-perform leaving you to make up any shortfall.

Repayment

A repayment mortgage requires you to pay back both interest and loan capital, so at end of your mortgage period there is no money owing. Early on you pay mostly interest, so it might seem that outstanding balance never gets lower. But later on you will repay more capital, and total will decrease more quickly.

Here is a selection of different mortgages that are available:

Discount mortgages

A mortgage is a loan, from a bank or building society that is secured against your house or flat. You have to pay back everything you borrow from your lender within an agreed length of time (the mortgage term). You also have to pay interest on what you have borrowed.

A mortgage is a loan you take out to buy property. Most banks and building societies offer mortgages, as well as specialist mortgage lending companies.

To repay mortgage you either make monthly repayments of interest and capital, or you pay interest only each month then repay loan at end of mortgage term from separate savings or investments.

The purpose of a mortgage is, quite simply, to enable a person to borrow money using property as security. As prices of houses are beyond immediate personal resources of most purchasers, it is necessary to enter into a borrowing agreement with a lender.

A mortgage is therefore a form of a secured loan, whereby lender agrees to lend a person money to enable them to purchase a property. This loan is secured against property by a legal charge and is subject to purchaser and property being able to meet lender's criteria. This loan is then paid back over a period of time along with interest charged by lender.

In most cases lenders will offer three times a single person's salary or two-and-a-half times borrowers' joint salaries. However you should consider whether your budget can afford repayments before borrowing to hilt.