All the Different Mortgages Explained

Choosing a mortgage can feel like trying to navigate a maze: there are different repayment methods, interest rate types, and specialist products that can all affect your monthly payments and long-term cost.

This guide breaks down the most common mortgage options available to home buyers in the UK. It explains what each mortgage type is, how the repayments typically work, and the key trade-offs to consider.

Mortgage basics: what changes between mortgage types?

Most mortgages differ in a few main ways:

• How you repay the loan (repayment vs interest-only)
• How the interest rate behaves (fixed, variable, tracker, etc.)
• Whether your mortgage includes flexibility (for example, overpayments, payment holidays, borrowing back)
• How the mortgage is structured (offset, joint, guarantor, specialist products)
• Whether it’s designed for a specific purpose (for example, buy-to-let)

Understanding these differences helps you narrow down options before you look at affordability and lender requirements.

Repayment mortgages

A repayment mortgage is the most common type for people buying a home to live in.

• Each month you pay interest plus a portion of the capital (the amount you borrowed).
• Over the mortgage term, the balance reduces until the loan is repaid in full.

Why people choose it: it’s straightforward and provides a clear path to owning the property outright at the end of the term.

Interest-only mortgages

With an interest-only mortgage, your monthly payments cover only the interest.

• The capital is repaid at the end of the term (or through an agreed repayment strategy).

Important practical point: you need a credible plan for how the original borrowing will be repaid when the term ends.

Where it may be used: sometimes for specific circumstances (for example, certain retirement planning approaches) and in some buy-to-let scenarios, depending on lender rules.

Fixed-rate mortgages

A fixed-rate mortgage keeps the interest rate the same for an agreed period.

• Your monthly payment is generally more predictable during the fixed period.
• If you move home or refinance during the fixed term, early repayment charges may apply.

Trade-off to consider: fixed-rate deals can protect you from rises, but if rates fall significantly, you may not benefit until the fixed period ends.

Variable-rate mortgages

A variable-rate mortgage has an interest rate that can change over time.

Common variable-rate types include:

Standard Variable Rate (SVR)

• The lender sets the SVR.
• The rate can change at the lender’s discretion.

SVR is often what borrowers revert to after a fixed or discounted period ends.

Tracker mortgages

• The interest rate is linked to a reference rate (often the Bank of England base rate), plus or minus a set margin.
• Some tracker deals include a collar (a minimum rate) which can limit how low the rate can go.

Discount-rate mortgages

• The lender offers a discount off their SVR for a set time.
• After the discount period ends, the mortgage typically moves onto the lender’s SVR.

Capped-rate mortgages

• The interest rate is limited by a cap, meaning it won’t rise above a certain level.
• Some deals may also include a collar.

Capped-rate mortgages are less common than fixed or standard variable options.

Offset mortgages

An offset mortgage links your mortgage with savings.

• Instead of earning interest on your savings in the usual way, the savings balance is used to reduce the amount of mortgage interest you pay.
• This can mean you pay interest on a lower “net” amount.

Why it can appeal to some borrowers: if you have savings you’re comfortable keeping accessible, offset structures may reduce the interest charged over time.

Help to Buy mortgages (where applicable)

Some borrowers refer to Help to Buy when discussing high loan-to-value options.

• The original Help to Buy mortgage scheme used an equity loan structure to help some buyers with a smaller deposit.
• Availability and structure can vary by time and scheme details.

Because these arrangements can change, it’s important to confirm what’s currently available and how it would affect your long-term repayment position.

95% mortgages

A 95% mortgage typically means a borrower puts down a 5% deposit, with the lender providing 95% of the property value.

Key considerations:

• Higher loan-to-value borrowing can come with higher interest rates and stricter affordability checks.
• With a smaller deposit, it may take longer to build equity.

Flexible mortgages

A flexible mortgage is designed to give borrowers more control over repayments.

Depending on the lender/product, flexibility may include options such as:

• Overpayments (repaying extra when you can)
• Underpayments or payment holidays (where permitted)
• Borrowing back after overpaying (on some products)

Trade-off to consider: flexibility often comes with additional conditions and may increase the overall cost compared with a more standard product.

Buy-to-let mortgages

A buy-to-let mortgage is for purchasing a property to rent out rather than live in.

• Lenders typically assess affordability using the expected rental income, not only your personal income.
• Buy-to-let products often have different deposit requirements and can be priced differently to residential mortgages.

Let-to-buy mortgages

A let-to-buy arrangement can be relevant for homeowners who want to move but may not be able to sell immediately.

• The property you currently own is rented out.
• In parallel, you take out a mortgage on the property you plan to live in.

These arrangements can be complex, particularly around rental income assumptions and how both mortgages are managed.

Joint mortgages

A joint mortgage is taken out by two or more people.

• The borrowers share responsibility for repayments.
• The property equity is typically split according to the arrangement.

Why people choose it: combining incomes and/or deposits can make it easier to meet affordability requirements.

Guarantor mortgages

A guarantor mortgage can be used when a borrower may not be able to secure a mortgage on their own.

• A guarantor provides additional support if repayments are not met.
• The guarantor may be required to put funds aside or offer security, depending on the structure.

This type of mortgage can help some borrowers access borrowing they otherwise might not qualify for, but it creates a significant financial commitment for the guarantor.

Specialist mortgages

Most borrowers will consider mainstream residential mortgages, but there are also specialist mortgage products designed for particular circumstances.

Examples of situations where specialist lending may be relevant include:

• Adverse credit circumstances
• Expat or overseas income scenarios
• Discount-off-market value purchases
• High-value / large loan requirements
• Self-employed income structures
• New build purchases

Specialist products can be helpful, but they often come with additional documentation and lender-specific processes.

How to choose between mortgage types (without overcomplicating it)

When comparing mortgage options, it can help to think in terms of priorities:

• Predictability vs flexibility: do you want stable payments (fixed) or more options to adjust (flexible/offset)?
• Repayment certainty: are you comfortable with repaying the loan over time (repayment) or relying on a future repayment plan (interest-only)?
• Risk of rate changes: how would you handle payments if rates rise (variable) versus if you need to refinance during a fixed period (early repayment charges)?
• Your wider situation: savings, rental plans, joint borrowing, or specialist circumstances can all change what’s practical.

Final thoughts

There isn’t one “best” mortgage type for everyone. The right choice depends on how you plan to repay, how comfortable you are with interest rate movement, and whether your situation calls for a more tailored product.

If you’re comparing options, focus on understanding the structure first—repayment method, interest rate type, and any flexibility—before you narrow down to specific deals.