The ultimate guide to all mortgage options available in the UK.
There’s more to mortgages than just fixed-rate deals. In fact, there are so many different mortgage options that you may not realise are available. Here, we explain all the types of mortgages you could access and the benefits and considerations of each. We’ll cover:
- Capital and repayment mortgages
- Interest-only mortgages
- Offset mortgages
- Fixed rate mortgages
- Variable rate mortgages
- Tracker mortgages
- Discounted variable mortgages
- First-time buyer mortgages
- Joint Borrower Sole Proprietor (JBSP)
- Guarantor mortgages
- Share ownership mortgages
- Buy to let mortgages
- Let to buy mortgages
Mortgage repayment structures
There are three main types of mortgage repayment structures. While some lenders offer mortgages for all of these structures, others don’t, or may have restrictions based on the product or specific criteria. Speak to one of our experienced brokers to help decide what option is best for your circumstances.
Capital and repayment mortgages
A capital and repayment mortgage is considered the standard repayment structure for most mortgages. Every month, your repayment amount will pay off a portion of your overall outstanding loan, plus the interest charged that month. This means that at the end of your mortgage term (e.g. 25 years), you will have repaid the full loan amount, plus the interest.
Benefits:
- Guarantees full repayment of loan and interest by the end of the term
- Builds equity in the property over time
- Predictable path to owning the property outright
Considerations:
- Higher monthly payments compared to interest-only
- Less flexibility if cash flow is tight
Interest-only mortgages
An interest-only mortgage means you only pay the interest on your overall loan each month, rather than repaying any of the loan itself. This means that over the term of your mortgage (for example, 25 years), your monthly repayments will be lower. However, you’ll need a plan to repay the full amount when the term ends, such as using investments, your pension, or selling the property.
Benefits:
- Lower monthly payments during the term
- Frees up cash for other investments
Considerations:
- Full loan remains outstanding at term end
- Requires a solid repayment plan (risk of repossession if not managed)
- Often harder to qualify for
Offset mortgages
An offset mortgage is linked to a savings or current account with the same lender. This is most commonly used to reduce the amount of interest you pay on your mortgage. Your savings reduce the amount of your mortgage balance on which interest is calculated, without actually paying down the loan.
For example:
You owe £150,000 on your mortgage and have £20,000 in linked savings. You’ll pay interest on £130,000 (£150,000-£20,000), rather than £150,000, which can help reduce your monthly repayments.
Benefits:
- Reduces interest payable without locking away savings
- Flexible access to a linked savings account
Considerations:
- Usually higher interest rates than standard deals
- Requires significant savings to make a big impact
Types of mortgage rates
There are four different types of mortgage rate structures. The structure affects how your rate is calculated and whether it can change over a specified time period.
Fixed-rate mortgages
The most common mortgage type, fixed-rate mortgages offer you an interest rate that stays the same for a set period (usually 2, 5, or 10 years). This means that your monthly payments remain the same, which is ideal if you’re looking for stability and easy budgeting.
Benefits:
- Predictable monthly payments for budgeting
- Protection against interest rate rises
Considerations:
- Less flexibility (early repayment charges apply)
- May miss out if rates fall
Variable rate mortgages
Variable rates are linked to your lender’s Standard Variable Rate (SVR), which can change at any time. Consequently, your mortgage payments may increase or decrease, and SVR rates are often more expensive than fixed-rate deals. However, variable rates usually come with more flexibility, such as lower or no early repayment charges.
Benefits:
- Often fewer early repayment penalties
- Can benefit if rates drop
Considerations:
• Payments can increase unpredictably
• SVR rates are often higher than fixed deals
Tracker mortgages
A tracker mortgage ‘tracks’ the Bank of England Base Rate, and the lender adds a set percentage for their profit margin. When the Base Rate changes, your monthly mortgage payments will increase or decrease accordingly. It’s transparent, but less predictable than a fixed-rate deal.
Benefits:
- Transparent link to Bank of England Base Rate (BBR)
- Potential savings when BBR falls
Considerations:
- No cap on rate increases (risk if BBR rises)
- Less predictable than fixed-rates
Discounted variable mortgages
This option gives you a discount on the lender’s SVR for a set period, usually 2 to 5 years. That means your initial monthly payments are lower, which can make the mortgage more affordable in the short term. However, because the rate is still variable, your payments can change if the lender’s SVR moves.
Benefits:
- Lower initial payments due to discount
- Good for short-term affordability
Considerations:
- Any SVR rises will increase monthly payments
- Discount period is limited
Home mortgage loans
First-time buyer mortgages
Many mortgage lenders offer deals specifically designed to help first-time buyers get onto the property ladder. These often include incentives such as lower deposit requirements, cashback, or fee-free deals, and can work hand-in-hand with government schemes designed to support first-time buyers.
Benefits:
- Lower deposit requirements
- Incentives like cashback or fee-free deals
Considerations:
• Limited choice of products
• May have higher rates after the initial term
Joint borrower sole proprietor mortgages
Joint borrower, sole proprietor (JBSP) mortgages allow you to add family members to your mortgage application to boost your affordability and increase how much you could borrow. While the mortgage is technically a joint application, as your lender will review your family member’s income as part of the affordability calculations, you remain the sole owner on the property title deeds.
Benefits:
- Boosts affordability without adding a co-owner to the deeds
- Helps family support buyers without ownership complications
Considerations:
- All borrowers are liable for repayments
- Complex legal and financial arrangements
Guarantor mortgages
A guarantor mortgage allows a family member, usually a parent or close relative, to agree to cover your mortgage payments if you can’t. This can help you to borrow more or secure a mortgage when your income alone isn’t enough to meet lender criteria. Whilst it’s a good option for buyers with smaller deposits or lower credit scores, the guarantor must understand the risks involved.
Benefits:
- Enables borrowing with low income or poor credit
- Family support can secure better deals
Considerations:
- Guarantor takes on significant financial risk
- Can strain family relationships if issues arise
Shared-ownership mortgages
Shared-ownership mortgages are designed for buyers who purchase a share of the property (typically between 25% and 75%) and pay rent to a housing association on the remaining share. These mortgages are designed to make getting on the property ladder more affordable, as you require a smaller deposit and mortgage for your share. Over time, you can increase your ownership through “staircasing” by buying additional shares until you own the property outright.
Benefits:
- Lower deposit and mortgage needed
- Option to “staircase” and buy more shares later
Considerations:
- Paying rent on the remaining share
- Restrictions on selling and property improvements
Ownership structures
If you’re purchasing a property with someone else (or more than one person), you’ll need to consider the ownership structure. This sets out who owns what and who is responsible for mortgage repayments.
Joint mortgages
A joint mortgage is an arrangement where two or more people share the mortgage and are jointly responsible for the repayments. This is particularly common among couples or family members who buy together.
Tenants in common mortgages
Commonly used when purchasing investment property, a tenants-in-common mortgage allows two or more buyers to own a property together while maintaining separate shares. Each person owns a defined percentage of the property, which can be unequal in value. This can be a great option for friends or family buying together, as it provides flexibility if one person has a large deposit or plans to sell their share later.
Property investment mortgages
If you’re mortgaging a property you intend to let out to a tenant, you’ll need a buy to let mortgage.
Buy to let mortgage
A buy to let mortgage is for those buying a property specifically to rent it out. Typically, you’ll need a 25% deposit, and affordability is based on the expected rental income rather than your salary alone. Although many lenders also have a minimum income requirement for applicants.
Let-to-buy mortgage
If you want to move and keep your current home as a rental until it sells or to keep it as a second home, a let-to-buy mortgage is a great option. You remortgage your existing property onto a let-to-buy deal, and take out a new mortgage to purchase your new home. This is considered a regulated buy to let mortgage application because you are purchasing a new home in the same transaction.
Finding the right mortgage option for you
Choosing the right mortgage isn’t just about the lowest rate. Whether you’re buying your first home, looking for more flexibility, or need some help from your family to get onto the property ladder, there’s an option for you.
Search all available mortgage rates here >>
Next Steps
Our experts are here to help. We’ll discuss your needs and search the whole market for the best rate available to you.
To discuss your home move mortgage options or to ask us a question, get in touch on 0345 345 6788 or submit an enquiry here.
