If you are new to mortgages, then it”s also likely that you are new to the options available to you. Annuity mortgage, repayment mortgage (surely they all have to be repaid), offset mortgage, interest only mortgage, endowment mortgage, are all mortgage buzzwords that you will hear being bandied about. But what do they actually mean and which one is for me?
Well, … for most us, the most common type of mortgage taken out is the annuity mortgage, which is also known as a repayment mortgage. This works as follows. You borrow money and then you pay it back monthly with interest. Simple as that. While this is the most common type of mortgage, it is by no means the only type. Get your lending institution or broker to explain the different types to you, so that you know exactly what you are buying. You wouldn”t buy a car without knowing the model, colour, engine size or price. So why buy a mortgage if you are unclear about exactly how much it will cost you in the long run.