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 Fixed Rate Mortgage
This type of mortgage is where you and the mortgage lender agree to fix the interest rate owed on your loan for a set period of time.
The period of time is usually between 1 and 5 years but could be longer. (That simply depends on the exact mortgage deal you choose).
After the agreed period, the interest rate owed on your loan usually reverts to the lender's Variable Rate.
You know exactly what you'll owe, but if interest rates drop you may be paying more than you might have done if you'd gone for the Variable Rate.
If you want to leave before the agreed term the early redemption penalty is usually significant. Always read the small print and ask as many questions as you feel like.
Standard Variable Interest Rate Mortgages
The Bank of England sets a base rate. This is the basic interest.
The mortgage lender's interest rate is set higher than the base rate - say 1 or 2% above it.
So if the base rate is 5% and your mortgage lender is charging you 2% above the base rate, you'll be paying 7% interest.
Now the Bank of England can change the base rate at any time. So if they raise it by 1.5% overnight the base rate is now 6.5%.
So your mortgage is now 8.5% i.e. still 2% above the base rate.
Your mortgage is variable because it goes up and down.
Each of the mortgage lenders have their own variable interest rate. They vary a great deal offering as much difference as 1%. It may not sound much but on a £100,000 loan that's £1000 per year.
Bad Credit Mortgage
Your credit score can sometimes suffer through no fault of your own. A sick child, a few late bills, or an unexpected expense can easily get you off track. Just because your credit score isn't perfect doesn't mean you have to miss out on the opportunities available to everyone else. There are lots of offers available to people with bad credit.
The phrase buy-to-let can refer either to the investment strategy of buying a residential property to be let for profit; or to the a particular category of mortgage used to purchase a property for letting.
For many years landlords have invested in residential property to be let for profit, but since the mid-nineties there has been rapid growth in the property market leading to a surge in demand for rental property which is being exploited by many mortgage providers keen to encourage new amateur landlords.
The benefits can range from a stable income to house prices going up with time, thus making it a valuable way to invest in money. The risks are that you may not be able to rent to house for 365 days per year, while having to pay a monthly payment.
Buy-to-let mortgage
Buy-to-let mortgages have been on offer in the UK since the late nineties; they are specifically designed for investors to borrow money to purchase property in the private rented sector in order to let it out to tenants.
Lenders take different approaches. The amount of money investors can borrow is determined by the rental valuation of the property. Usually the annual rental income has to cover a certain percentage of the mortgage repayments, somewhere between 120% and 150%. This is to allow surplus rent to cover other costs such as property maintenance and void periods (periods when there are no tenants living in the property and therefore no rental income).
Other lenders will offer a three times' salary multiple and half the rental income.
Others base the amount that they will lend on your salary and the existing loan commitments that you have, but then apply the 'deduction rule'. This means that they will lend up to 3.5 times your income (or whatever salary multiple applies), minus a representative figure for annual mortgage payments worked out at a pre-set level of interest. Say you earn £40,000 and have an outstanding mortgage balance on your property of £120,000. Under the rule, the annual mortgage repayments may be calculated as £10,000. This would be deducted from your salary to leave £30,000, which is then multiplied by 3.5 to give £105,000 - the amount that you are able to borrow.
Typically the interest rates that are offered on BTL mortgages are fairly close to residential mortgage rates but will on average be higher and typically charge higher fees. This is due to the perception amongst banks and other lending institutions that BTL mortgages represent a greater risk than residential owner-occupier mortgages.
This type of investment has become very popular in the UK over the last five years or so, as house prices have dramatically increased. Another reason for their popularity is the tax advantages that are available to UK BTL investors. Rental income is considered in the same way as salary, and is therefore often taxed at 22% or even 40%. However, landlords can deduct costs from the taxable portion of their rental income, and these costs can include the interest portion of their BTL mortgage repayments as well as maintenance costs on the property. This tax set-up has made BTL investments more popular over the last few years.
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.
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.
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.
Current 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.
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.
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Mortgage Types 
