You've missed birthday dinners, holidays in Ibiza and messy nights out for the last 3 years & finally have all the money you need for your mortgage deposit!
2am you can't sleep because you're way too excited so you jump online & start looking at mortgages. You friends where right...you're not fun at all. You tap in all those "i'm now officially an adult details" into the mortgage comparison website & get back 150 result that all look the same, but a little different at the same time. WTF.
The Two Main Types of Mortgages
Now there are two main types of mortgages that you need to know about:
Where you pay back a bit of the loan and a bit of interest every month until the end of the mortgage term
Where you pay back the interest each month and only pay back the original loan at the end of the mortgage term. Your monthly payments are a lot lower than with Repayment Mortgages but...you are not building any equity in your home. A fancy way of saying you're not increasing the amount of your home that you own with every mortgage payment.
Wait What Are All These Mortgage Deals?
Now there are a few different types of mortgage deals that are worth knowing about:
Fixed-rate mortgage are probably the most simple type of mortgage deal that you will run into! You just pay the same interest rate until the end of the Mortgage.
With Tracker Mortgages, the interest rate you pay on your mortgage follows (tracks) the Bank of England base rate. This means the interest you usually pay is Base Rate (Bank of England) + your mortgage rate.
With Discount Mortgages you only pay the standard variable rate of the lender, with a little discount to make it a bit more appealing.
If you have a lot of money in your savings account Offset Mortgages might be perfect for you. They use money that you have in a savings account to reduce the amount of the mortgage loan that you pay interest on.