As opposed to a personal loan which can be used to purchase a whole manner of things, a mortgage is a special type of loan which is specifically used to purchase a property. Very few people have the funds to purchase a property outright which makes a mortgage an excellent way for people to establish themselves on the property ladder.

As a large sum of money will be borrowed to cover the cost of purchasing a home, banks and building societies will secure the loan against your home. This protects the lender should you default on your repayments as it means that they can repossess your property and sell it on to cover the loss.

In addition, as mortgages are for large amounts of money, they take considerably longer to pay back than a loan. However, while in the past mortgages took 25 years, there is now greater flexibility in repayments. Indeed, if you are able to keep up with higher monthly repayments, you can pay back your mortgage is less time.However, if you are unable to keep up with regular mortgage repayments, you can opt for a longer payback period in order to secure a lower monthly bill.

As with loans and other financial products, there are a range of mortgages available and each is tailored to meet the requirements of specific borrower types. For example, if you are looking to buy your first property, you may be better off opting for a First Time Buyer mortgage. Similarly, if you already have a mortgage, but have found a better deal elsewhere further down the line, you may find it more economical to take out a remortgage deal.

When comparing the various mortgages out there you will notice that there are three main types of mortgages: tracker mortgages, variable rate mortgages and fixed rate mortgages. Tracker mortgages are a type of mortgage where the interest rate varies in accordance to the bank of England base rate and variable mortgages associated with the provider’s standard variable rate (SVR).

Finally, as their name suggests, fixed mortgages charge a fixed amount of interest for the entirety of the term.

Find out how to get a mortgage as a First Time Buyer
Find out if a Fixed Rate Mortgage is what you need.
All you need to know about Remortgaging.
Find out all you need to know about Tracker Mortgages.