New! Estate Agents, Mortgages and Home Loans Glossary

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Mortgages / Home Loans

Below are the two main types of mortgage currently available, although there are other forms these tend to be the most popular. If you like to play it safe then the only real option is to go for the repayment mortgage, as these are usually done on fixed rates that last from 3 to 5 years, and then renewed at the lenders new rate. The endowment mortgage is a good way of making money, but because it is tied to the stock market it behaves in very much the same way, with some months being good and some bad.

Endowment Mortgage
This is a type of mortgage where monthly payments are made into a endowment (life assurance) policy. The loan is paid off in one lump sum at the end of the loan period. The problem with this type of mortgage is that is subject to market changes, and could leave you with extra to pay at the end of the term. It can also work the other way where the market might gain momentum, and actually increase the value of the policy to a higher rate thus providing you with extra money.

Repayment Mortgage
This is your typical basic home loan where capital and interest on the loan are paid off in monthly installments. It usually works out cheaper if you have your mortgage calculated by the day. They are also usually available in variable, fixed and capped rates. In the current economic climate this is probably the wiser choice as rates tend to stay just 1% above the Bank of England's base rate. You are usually tied into your mortgage by your lender, and should you wish to change midterm you may be subject to penalties.

If you are unsure about anything on your mortgage please consult your mortgage lender as they are always there to help.