Finance newzz - Get freedom from them

Getting a mortgage is the biggest financial commitment most of us will ever make, and one of the biggest potential areas to save money .

These tops tips will arm you with a good basic understanding of how mortgages work and what sort of deals are available, which will help make sure you get the right mortgage to suit your needs .

Repayment or interest-only mortgage ? It's important to consider how you'll repay the mortgage and to understand whether a repayment or interest-only mortgage is right for you . A repayment mortgage that your monthly mortgage repayments go to repay both the capital borrowed and the interest charged, meaning you'll have paid off the mortgage by the end of the term .

With an interest-only mortgage, your monthly mortgage repayments only pay the interest charged on the capital borrowed, meaning that you'll still owe the amount you borrowed at the end of the term, unless you take a separate repayment vehicle , such as an endowment policy or an ISA . Interest-only mortgages can appear to be cheaper in terms of monthly repayment amount, but you must factor in the additional monthly cost of your repayment vehicle .

Interest-only mortgages can be more tax efficient if you are using an ISA based investment as your repayment vehicle . It's important that you can understand the risks involved as the value of your repayment vehicle could end up being lower than the capital you borrowed . Read our guide to mortgages for more information .

Fixed or variable interest rate? With a fixed rate mortgage your monthly payments are fixed for a set period of time, usually between 2 and 5 years . Fixed rate mortgages are good if you want the security of knowing your monthly payments will for a set period of time, especially during uncertain economic times or in a climate when interest rates are raising . You do have to pay for this privilege though, as upfront fees and early redemption charges are common with fixed rate mortgage . Take look at our current best buy fixed rate mortgages to compare the latest deals and offers .

With variable rate mortgages you pay the mortgage lenders' standard variable rate or a rate that is linked based to bank of England base rate, so your payments can go up or down in line with market conditions . For some variable rate mortgages, the fees charged aren't are as high as for a fixed mortgages. Variable rate mortgages are good if you don't need the security of knowing what your monthly repayments will be and during a climate where interest rates are declining . Take a look at our current best buy variable rate mortgages to compare the latest deals and offers .

What about a discounted variable rate ? with a discounted variable rate mortgage lender gives you a discount off the variable rate for a set of period of time, usually of 2 to 5 years . Your monthly repayments can still go up and down in line with the market, but you can benefit from any decline in mortgage rates, which you wouldn't be able to with a fixed rate mortgage . Discounted variable rate mortgages are cheaper than variable rate mortgage, but do charge arrangement fees . Take look at the best buy discounted variable rate mortgage the mortgage lender gives you a discount off the variable rate for a set period of time, usually of between 2 to 5 years . Your monthly repayments can can still go up and down in line with market, but you can benefit from any decline from any decline in mortgage rates, which you wouldn't be able to with a fixed rate mortgage . Discounted variable rate mortgages are cheaper than variable rate mortgages, but do charge arrangement fees . Take look at the current best buy discounted variable rate mortgages to compare the latest deals and offers .

What's a tracker mortgage ? Tracker mortgages are variable rate mortgages that are linked to either the bank of England base rate or the LIBOR rate . As with variable rate mortgages your monthly mortgage payment can go up or down in line with market conditions. With a tracker mortgage you are guaranteed to benefit from any interest rate reductions ( albeit after a certain time ) which you are not with a variable rate or discounted rate mortgage .

What are flexible or life style mortgages ? Flexible or lifestyle mortgages are really features on a fixed or variable mortgage that let you make extra payments or take payment holidays . Making extra payments on your mortgage can save you money by reducing the overall amount of interest you'll pay, but your money will be tied up in your property, meaning you won't be able to access it quickly in the event that you need to . payment holidays offer great flexibility ( e.g. you don't want to pay the mortgage for a couple of months due to arrival of a new baby ) , but you still incur interest thus increasing total amount you have to pay back . Some mortgages only let you take payment holidays if you've made previous over payments or after making a set number of repayments .