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What types of mortgage are there?

Fixed, variable, annuity, interest-only… it’s easy to lose track.
Jun 28th 2019, 3:58 PM 17 0

THE MOST COMMON mortgages that you’ll come across are fixed rate and variable rate. Both of these are types of annuity mortgage, or can also be known as a repayment mortgage.

With an annuity mortgage, your lender will figure out how much you need to pay each month in order to clear the loan by its end date. This figure will include interest payments on the loan as well as the repayment of the original capital.

But there are also interest-only mortgages, where your monthly repayments only include the interest on your loan. You then have to pay back the original capital using a pension or endowment policy, or by selling the property. 

Another term you may have heard is an ‘offset mortgage’, which combines a variable interest rate mortgage with a current account. Interest-only and offset mortgages are unusual in today’s market but check out the CCPC’s website for full details.

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Sarah Harford

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