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8 Types Of Mortgages For Homebuyers In The UK

Are you looking forward to purchasing a home in the UK? Are you all confused about the mortgage rates & finding it difficult to search for an efficient mortgage that will fit your budget as well as please your expectations?

Then sit back and relax cause we have got your back! This article has listed the eight types of mortgages available for homebuyers in the UK. This article will help you understand the few types of mortgages available in the UK. We have successfully mentioned the cons of the classes and for which house buyers they’re an ideal fit.

Types of Mortgages For Homebuyers In the UK

Interest-only mortgages

If you’re looking forward to lowering your initial mortgage costs by repaying only some interest at the end of the month, then an “interest-only mortgage” is the ideal plan for you!

To reimburse the loan, a repayment capital would be required, which varies from lender to lender. However, few plans are like stock and shares, investment bonds, unit trusts, endowment policies, and pensions.

A disadvantage of interest-only mortgages is that some people might find it very difficult & overwhelming to repay the lump sum amount altogether at the end of the mortgage term. Therefore, it’s best suitable only if you acquire an alternate payment strategy or plan on downsizing at the end of the mortgage term.

Fixed-rate mortgages

As it sounds, fixed-rate mortgages have a fixed interest rate with a set amount of time which gets affected by neither the inflation nor the Bank of England rates. These certainties make them appealing!

Although one disadvantage is that once you propose the mortgage, you may have to stick to that introductory rate for a fixed period, i.e., the second, third, or the five years, and find it astonishingly challenging to switch again.

It is best suitable for first-time buyers as they will know exactly how much they are spending each month until the period expires, which will make it easier for them to budget. It is suitable for homeowners looking to lock into a reasonable mortgage rate.

Repayment mortgages

Repayment mortgages are the most common type of mortgage currently in the market. In this type of home loan, you will have to pay some amount of capital and some amount of interest per month, which will slowly & steadily help you to own the home reasonably.

Its primary disadvantage is that it carries bulkier monthly repayments compared to other loans, which may turn out to be overwhelming if the budget & finances are tight for any month during the starting few months.

It is ideal for people looking forward to building equity and successfully owning the home at the end of the repayment process.

Variable-rate mortgages

Unlike fixed-rate mortgages, in this type of home loan, the interest rate can fluctuate either higher or lower. It is adversely affected by the interest rate of the Bank of England’s base rate.

The disadvantages of this loan solemnly depend on the type of variable rate mortgage you are considering. To subsequently divide it into four branches, namely Standard variable: best for homeowners looking forward to acquiring the freedom to enjoy switching products according to their convenience.

Discount rate: Best for new purchasers looking forward to a much more affordable rate during an introductory period.

Capped rate: Best for homeowners looking forward to benefiting from the fall in mortgage rates Tracker rate: best for homeowners looking forward to increasing the repayment if the rate exceeds within the period.

Offset mortgages

Wondering which mortgage is best and which provides the lowest interest rate? Offset mortgages present that absolute luxury! To limit the interest being charged, an offset mortgage links your mortgage to your savings.

A minor disadvantage of this loan is that the possibility of you earning any interest on the savings which you have offset will be zero to none. This type is ideal for homeowners who have stored loads of savings and are unaware of where to spend them.

95% mortgage

This loan permits you to borrow 95% of the loan amount alongside only a 5% deposit. A significant drawback of this loan is that they tend to charge a much higher percentage of interest rate to cover any future losses. This drawback possibly could also lead to the failure of remortgaging any better future deals which will have a lower interest rate. Ideally, this type of mortgage is best for people struggling to remortgage to secure their deposits but, at the same time, are willing to pay a much higher interest rate meanwhile the course of the loan.

Flexible mortgages

A flexible mortgage spoils you with exceptional freedom during the repayment. It allows the homeowner to overpay or underpay according to their convenience. Its features include the luxury of taking a payment break, borrowing money back, and the comfort of getting their interest calculated daily.

A significant disadvantage of this home loan is that due to the following luxuries, lenders charge a much higher interest rate compared to the rest. This type of mortgage is ideal for homeowners with solid financial flexibility and those looking forward to compressing their interest as much as possible by overpaying their mortgage.

Joint mortgages

Are you looking forward to taking a mortgage loan with two or more people? The joint mortgage will provide you with that luxury! You may be required to split the repayment fairly with each other. It will play cards in your favor when affording a place out of your budget since breaking it can make it much more affordable for you & your partner. The higher the deposit from your savings, the more you will have access to choose your favorable terms & rates. It is ideal for groups of people or couples willing to share the responsibility of a mortgage loan.


Along with these eight types of mortgages, a few more worth mentioning, like guarantor mortgages, help-to-buy mortgages & buy-to-let mortgages.

Now you’re all ready to go and look for your ideal mortgage! Without rush, pick a mortgage that benefits your finances. Before choosing one, go through the wide range of available options. Hopefully, this article helped you process a clearer image of the mortgage plan.

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