Of all the mortgages available today on the UK market, the two most popular types are the standard variable rate mortgage and the fixed rate mortgage.

There are other mortgage products available that also come under the umbrella of a variable rate mortgage, such as a base tracker mortgage or a discounted mortgage.

If you are new to the world of mortgage it may be difficult to decide which mortgage to opt for, and there are pros and cons to both variable and fixed rate mortgages.

When deciding whether to opt for a variable or a fixed rate deal it is important that you consider the pros and cons of both so that you can make a more informed decision with regards to which type of mortgage will prove most suitable for your needs and pocket. Your mortgage is an important long term commitment and in order to avoid hassles and additional costs it is important that you get it right first time.

What kind of mortgage is best for you? Here we will look at Flexible Mortgages:

Closely related to the ‘interest-only’ mortgage, the flexible mortgage means your monthly payments cover the interest only, however they have the added benefit of allowing you to make extra payments as and when you can.

For those that have large bonuses or regularly put in overtime finding a repayment mortgage that is comfortable fit may prove difficult, however hope is not lost.

Unfortunately you cannot accurately predict your bonuses or just how much overtime you’ll be able to fit in this month, it is for this reason that lenders don’t factor in such if’s and maybe’s when assessing your income capabilities. Consequently you are likely to be offered a mortgage that is much smaller than you believe you can afford. For those that fall into this category, a flexible mortgage could offer the best fit for you and your family.

A Fixed Rate Mortgage, as the name suggests, is a mortgage where interest rates cannot be altered.

If you like to stick to a budget then this is the mortgage for you. People who are sure of their method of repayment and people who prefer certainty usually take the fixed rate mortgage. Fixed rate mortgages usually have a high rate of interest though the borrower is sure of the overall payment at the end of the mortgage period.

Fixed rate mortgages allow the borrower to plan their payment installments and are stress free since the borrower is always aware of the installment obligation. Fixed mortgage rate is also advisable for people with good liquidity since it takes a shorter period to complete the mortgage plan. The borrower is allowed to pay the principal amount early and this is to their advantage since they reduce the level of interest payment. This characteristic tends to alter the title of the mortgage but the ‘fixed’ title is due to the fixed repayment period.

The interest rates of fixed rate mortgage increase with the increase in the repayment period. Fixed rate mortgage for a short period will have lower interest than that of a longer period

Discounted Mortgage Loans work by having for a period of time the “discount period” which is a set percentage discounted from the standard variable rate or the bank base rate normally off their standard variable rate or bank base rate.

For the discount period early repayment charges usually apply these may apply for the duration of the discount period or they might apply for a period beyond this date. Some discount deals may have steps in them so perhaps for the first year the discount rate will be very attractive then reduce the level of discount each year until the end of the total discount period. Known as a stepped discount.

Many lenders for remortgaging offer free legal costs and valuation though there is generally a lender’s fee which could be charge up front or added to the home loan on completion.

Discount deals potentially may help you to reduce monthly mortgage payments. Discounted mortgage deals aim to reduce the monthly mortgage payments for a determined period (i.e. the discount period) thus helping clients with their monthly budget. Caution should be taken as rates with this product are not protected from going up.

Though caution should be taken if the borrow is stretched and could not afford a rate rise for example a first time buyer if they decided to move they may find the early repayment charges high and they may be tied into a deal with an uncompetitive interest rate for some time. There can also be a high jump in monthly payments when the discount period ends and reverts back to the lender’s higher standard variable rate.

You may be considering the purchase of a new home.

Many people are and they will be making one of the most important financial decisions of their lives when they do it. Most people will not have the money to be able to afford to house straight out and will have to take out a mortgage loan. It is extremely important to compare low rates and consider a discount mortgage refinance solution in order to achieve the lowest mortgage rate

A discount mortgage refinance will help you replace your current mortgage with a completely new loan. This will give you the ability to compare low rates to help you get the lowest mortgage rates possible since you will be able to replace your current high rates with more attractive offers that are available to you. Have your finances changed since you applied for a mortgage? If so then a discount mortgage refinance will be able to allow you to take advantage of that. These services will be able to allow you to get the lowest mortgage rates while giving you a second chance to get the best loan available.

Remortgage is exchanging your current mortgage for a new mortgage. The biggest reason to remortgage is to save money with a reduction of interest rates every month.

Remortgages help you to pay mortgages faster by reducing loan term. Remortgages are of fixed type in which there are fixed repayments and variable type includes variable amount repayments. Remortgages include changing your current lender to a new lender because very few lenders will entertain remortgages for their current borrowers. Remortgages are available for both homeowners and tenants, good and bad credit holders.

Remortgaging is the process by which a person or couple either:

• Switch their mortgage lender to capitalize on cheaper interest rates

• Re work their current mortgage with their same lender to receive the benefits of cheaper interest rates.

Remortgaging could provide the means by which the payment equals what a person’s new finances can manage, and the term of mortgage changes in the homeowner’s favor by decreasing in its length of time. People also choose to remortgage their homes to gain money. Debt consolidation can be achieved by gaining enough finance to pay off debt and having only one lump sum to pay. Remortgaging one’s home allows for extra money is some cases as if the home debt is paid down and interest is lowered, money may be made available and debts may be paid off.

A remortgage loan is a type of transaction where the homeowner chooses to switch mortgage lenders, but they will stay in the same property as in the first mortgage.

People choose remortgage when they want to save on repayments or if they want an injection of extra funds.

Remortgages generally fall into three categories: fixed rate, discounted rate, and variable rate. With a fixed rate, your payments will be set for a certain length of time. During this period, your payment rate will not fluctuate up or down, but it will stay at the same level. Once the predetermined fixed-rate period is over, the loan will then adopt a variable rate. A discounted rate remortgage is like a variable rate mortgage, but it differs in that the lender offers you a discount on your interest rate. Thus, your payments will be reduced for a certain length of time, but your payments are still influenced by the fluctuations in interest rates. A discounted rate remortgage becomes a variable rate remortgage once the discounted period is over.

A variable rate remortgage makes it fairly difficult to predict what your monthly payments will be since the interest rate fluctuations will determine the amount you have to pay each month.

Cash Back Mortgages offer an opportunity to take a cash lump sum, usually at the start of your mortgage. It can be a fixed amount or a pre agreed percentage of the amount of the loan.

Percentages range between 1% and 5% - but can be as high as 10% - of the mortgage amount.

Cash back mortgages are often not stand alone mortgage types, and can be added onto the other different mortgage types, such as trackers and fixed rate deals. In fact, pure cash back mortgages are quite uncommon.

The obvious advantage of a cash back mortgage is that it gives you some money at a vital time to enable you to buy items such as those mentioned above, or home furnishings, or you might choose to pay off your credit card debts, or use the cash to help pay off those fees that go with buying a house as discussed above.

Cash-back mortgages are often useful for first time buyers with the mortgage lender offering a lump sum of cash at the start of a mortgage, giving them a good start to their home owning life.

Of all the decisions you’ll have to make on your mortgage, the most confusing part is understanding interest rates.

Understanding what each type of interest means can help you make the right decision when it comes to choosing the mortgage you want to go with.

Variable Rate

This is one of the most common mortgages and probably the one that people relate to the most. It simply means that your monthly payments will be dictated by whatever the current interest rates are – so, if the housing market is good, you’ll probably see your monthly payments rise, whereas if the market’s in a slump, your interest rates and payments will be lower.

Tracker Rate

Similar to a variable mortgage but with one big difference – the interest rate is tied directly to the Bank of England, so whatever decisions are made there, you’ll find your interest rate is slightly above or slightly below, dependent on current rates.

Fixed Rate

The other most popular type of mortgage, since this keeps your interest rate fixed for a set period of time (usually between 2-5 years). This ensures that you know exactly what you’re paying month in and month out. Of course, the downside to this type of mortgage is that if bank rates fall, you won’t benefit from the lower mortgage payments that people on variable rates will enjoy. You’re also usually penalised if you decide to switch lenders throughout your mortgage term, often as much as 3-4 months worth of interest.

Capped Mortgage

Often seen as a mix of variable and fixed rate, a capped mortgage means that your interest rate will only go so high for a set amount of time. So, if your cap is 10% and the housing market crashes through to 10½% or more, you won’t pay the extra rates. However, there’s the added bonus that if the interest rates fall, you’ll make the savings that a variable rate mortgage would give you.

Discount Mortgage

Just as it suggests, this will offer you a discount on your variable interest rate for the first couple of years on your mortgage. However, although it helps reduce your early monthly payments, you still pay the same overall amount that you would if you take out a standard mortgage.

Cashback Mortgage

Excellent for the first time buyer especially, this offers you a cash rebate at the start of the mortgage, calculated as a percentage of your overall mortgage. You receive this cash instantly, and simply pay it back at the end of the mortgage. This is an ideal solution for anyone just starting out on the property ladder, or for anyone on a limited budget.

There are other types of mortgage as well as these ones, including current account mortgages and offset mortgages, which a specialist advisor would be able to discuss with you. Just knowing what’s available and whether it’s suitable for you or not can make a big difference in the long run.

Overwhelmed by all the mortgage advise you are being given?

First, get some free advice.  The company should not charge you for advice. They are there to help you through the process. If they want to charge you, then it may not be the best advice.

Next, decide how much you can afford to borrow. Be realistic on how much you can pay on a mortgage each month. Then look for houses in your price range.

Once you find a house, find a broker that deals in mortgages. They are much more helpful with people who have a house in mind because that is how they make their money. They only get paid when the mortgage is in place so they will try to get the mortgage for you.

The first thing you ask a broker is, “Do you provide a whole of market quotation?” If they do not, then simply thank them for their time and walk out. Not getting a whole of market quotation can cost you a lot of money.

After getting a first quotation, get a second quotation. You need at least two quotations. It can either be from two brokers or one broker and one from the high street.

Once you find a broker with a good quote, you can proceed to buying the house.