Five-minute guide to choosing a mortgage

The first thing to think about in choosing a mortgage is whether to go for a repayment or an interest-only option. An interest-only mortgage means you will have a cheaper monthly repayment, as you will only pay off the interest rather than the capital, but at the end of the term, you’ll be left with the original debt.

If you opt for a repayment mortgage, on the other hand, you will clear the entire debt by the end of the term, but you will likely have higher monthly payments. 

David Hollingworth mortgage expert at London & Country, says: “Repayment mortgages are the way forward. While interest-only is an alternative option if you have equity-based investments [that you plan to cash in on maturity of the mortgage deal] there’s always a chance you could end up with a shortfall at the end of the term.”

Another factor to consider is how your income might change over time, and when. Mortgage interest rates are either fixed or variable, so you should consider if you are happy to pay what is usually a higher fixed rate, or if you don’t mind taking a gamble on a variable rate that could hike unexpectedly.

“First-time buyers may want the security of a fixed-rate mortgage so they know where they stand,” says Hollingworth. After shelling out a deposit and all the other costs related with moving, first-time buyers are unlikely to have a safety net in place for if their repayments do rise, so a fixed mortgage will usually suit them better. 

Researching different mortgage options takes valuable time and energy but you are more likely to get a better deal if you cover all bases. For example, you might need flexibility in the case of a missed payment, so looking for a mortgage with the option of a payment holiday would be best for you.

It is best to disclose all your details at this stage, such as any fluctuations you experience in income, or other unique circumstances, this will help you get the right product. 

Mortgage types

Mortgages generally fall into three categories: standard variable rate (SVR), which falls in line with the Bank of England base rate; fixed rates, where the interest rate is fixed for a set-term; and capped rates, where the interest is capped at a set level.

In the UK, it’s a 50/50 split between those who choose fixed and those who choose variable, according to Hollingworth. 

Within variable rates there are tracker mortgages, which have an interest rate ‘tracked’ to the Bank of England base rate, and discounted rates, where the rate is fixed below the lender’s own standard variable rate.

Do your research

But where to start with this abundance of information? Hollingworth suggests the internet: “You can get an idea of rates online. However, you can’t get a feel for the different circumstances. For tailored advice, visit a mortgage broker. It’s more about criteria – fitting the circumstances to the borrower.”

Websites such as, uSwitch and can compare different mortgages and interest rates, but they don’t show your eligibility for the product. The best way to find a mortgage deal is through an independent mortgage adviser, who will look at lots of different lenders and find a product to suit you. 

The big banks still offer the best products, but some smaller building societies also offer good deals, says Hollingworth. “Consider smaller building societies, they can be really quite competitive, but the criteria may not be as flexible. Don’t block off any options.” 

Mortgages come with all manner of charges and conditions, so ensure you look at the total fees you will have to pay rather than just the interest rates. Lenders may include a free valuation of the property to entice you, or a small cashback fee when the transaction has completed, but don’t choose a deal based purely on these incentives.

Hollingworth expands: “Read the literature - especially the ‘key facts illustration’ - which will tell you the rate you’ll pay and what the charges are if you pay it off early. Go through that and you’ll understand if the product is right for you.”