A mortgage loan is a loan that you take from from a lender to but a property or home. And this is one of the biggest loan one take in his her life.

In today's market there are lot many option available and that is good for you. It provides you with lot of flexibility to pay money back to the lender. Basically the mortgages can be classified.

1. Interest only Mortgage: Here your mortgage is divided in two parts. the first is the amount you have borrowed from the lender and second is the the interest that you will be paying to the lender.
2. Repayment: In this case the property will be your only when you have paid of the whole debt on it as you pay a little money towards the debt with every installment. And this goes till the complete full money has not been returned to the lender.

Interest Only mortgage:

In interest only mortgage the money is paid actually for the interest on the amount. and not on the capital. And the capital amount will be directly paid. And you can pay the capital by simultaneously putting money into some investment scheme or fund. And at the end of the mortgage term you generally have some money more then the capital amount to be paid to the lender.

In in this case the lending company offers you an investment plan to collect the money for the capital repayment. Here you are not bound to accept that. It's entirely up to you where you want to invest in as per your convenience.

You must consult IFA before choosing any kind of interest only mortgage.

Repayment: In this case the property will be your only when you have paid of the whole debt on it as you pay a little money towards the debt with every installment.

Repayment mortgages can be classified into two basic categories.

1. Fixed Rate: In this case the loan provider and seeker fixes up the rate of interest over the time period of 1-5 years. And here you are pretty much sure about what you have to pay each month. If the interest rate increases in future you will be paying less. and if the rate of interest decrease then you will end up paying more in future.
2. Variable rate: The variable rate of interest is when you rate of interest is set higher than the Bank of England set base rate. This is generally 1-2 % higher then the standard rate.). and it goes along with the rate of interest decide by the bank of England at that time of repayment. Here if the rate of interest decreases in future then you will be paying less but if that increases you need to pay more.