You have to pay interest on any debt, and mortgages are no different. However, there are a range of options to consider.

Mortgage lenders offer different interest rates and also different types of interest rate deals. Bear in mind that mortgage rates tend to move in line with the Bank of England base rate, which is reviewed monthly.

You have two important decisions when choosing an interest rate deal: whether to choose a fixed or variable rate mortgage, and whether to choose a short-term deal or one over a longer term.

Both have advantages and disadvantages and the most appropriate for you will depend on your particular needs and circumstances. Your mortgage advisor or Independent Fiancial Advisor can help you with your options and chocies.

Rates

Variable Rates: This means you pay the going rate on your loan. The mortgage rate changes every time interest rates change or, as in most cases, the overall effect of any interest rate changes is calculated once a year and payments are altered accordingly. Whatever kind of mortgage you start with, it is likely to change to variable rates at some point.

Fixed Rates: The interest rate is fixed for the period agreed - often two to five years. These are ideal for budgeting or if you think rates might increase. You do not benefit if rates fall, and will face penalties if you try to quit. Very low rates may tempt you, but they can be used to trap you into paying over the odds. Check how long you will have to stay with the lender before you can switch without penalty.

Capped Rates: These are fixed, but if rates fall you pay the lower rate. Such deals can be a good for budgeting.

Cash Back Deals: This is when lenders offer money back if you take out a particular product.

Discounted Rates: Under this type of mortgage the borrower is offered a discount off the lender's variable rate. The rate paid will fluctuate in line with changes in the variable rate. The discount applies over a set term.

10 Key Points

The government has given homebuyers a list of vital checks to help them find the right mortgage for them. They suggest that buyers ask these 10 questions before agreeing a mortgage with a lender.

1. How much can I afford to borrow?
2. How can I tell which mortgage rate is best for me?
3. What is the best type of mortgage for me?
4. How should I repay it?
5. Can I make lump sum payments to reduce the size of the loan?
6. Are there any redemption penalties?
7. Does this mortgage come with compulsory insurance?
8. What other charges will I have to pay?
9. What happens if I can't pay?
10. What about the small print?