People who apply for mortgages generally have a range of different types of mortgage to choose from. Each type of mortgage has different features that might be attractive or unattractive to the person making the application. So it pays to explore the various types of mortgages available before making a decision.

Traditionally many mortgages had a variable interest rate from the beginning. With these types of mortgages, it is possible that the interest rate will change many times, both up and down, before the life time of the mortgage is complete. Some mortgage borrowers prefer to have mortgages with variable rates because these loans might have a lower initial interest rate than an advance with an initial fixed interest rate. For these owners, taking the risk that the interest rates may increase in the future is worth the possible savings they can enjoy.

Nowadays many mortgages are "fixed rate", that is they offer an initial fixed period, commonly 2 years, during which the rate of interest and hence monthly repayments do not change. Typically, at the end of the fixed period the interest rate will return to the lenders' standard variable rate.. Some mortgage borrowers find these fixed periods at the start of their mortgage beneficial because they know that the amount of interest and monthly repayments they will be expected to pay will not change. For these borrowers, a mortgage with a fixed interest rate makes it easier to budget for monthly expenses and to make future financial plans.

Some prefer a "capped" or even a "cap and collar" mortgage. These are mortgages with a variable interest rate that have a limit placed on how high, the cap, or how low, the collar, the interest rate can go. It is possible that one of these mortgage loans will only put a cap on the interest rate fluctuation for a specified period.. After this the rate may become variable and may no longer have a `cap` in place. A borrower may have to pay extra fees for a capped mortgage.

Discount mortgages have also had their period of popularity. These start out with a fixed reduction in the variable interest rate that will, later in the term, typically two years, be removed and return to the standard variable rate. If the variable rate goes up or down the discount is taken off the new rate so unlike the fixed rate your monthly mortgage payments can go up and down. These types of loans invariably offer a lower rate than any others and are probably best for those that do not have a great deal of money available on a monthly basis and want to minimise their outgoings and hoping that their will not be any major base rate increases.

There are a range of other mortgage deals available that are given at the start of the deal. Some give the borrower cash back after signing the deal, some will pay the legal costs, some the valuation costs or a combination of the these as an encouragement to their mortgages..

Invariably with all of these mortgages the lender will endeavor to tie in the borrower while the special terms period lasts usually by the use of early repayment charges and some may even extend the tie in period beyond that of the special terms, often called an overhang. Even a standard variable rate mortgage will have a tie in period although normally it is considerably shorter than those mortgages with special deals.

Regardless of the type of mortgage loan a borrower applies for, he or she will be asked to sign a contract that specifies the terms of repayment. This usually involves making a payment of an agreed amount once every month. The contract will also almost certainly give the bank the right to repossess the home if the borrower fails to repay the loan in the agreed manner.