Another popular type of mortgage available is the interest only mortgage, so called because all you are making repayments towards each month is the interest accrued.
This means that at the end of your mortgage period, again of which is up to you, all you will have paid off is the interest amount on the mortgage, you will still be left with the amount you borrowed in the first place owed to the lender.
You therefore have to arrange a long term investment plan to cover this when your mortgage period expires. The up side to this is that if you invest wisely there is always the possibility that you could pay your mortgage off early and have a lump sum for yourself.
The down side is that you are in the hands of which ever investment you have decided to use. If the market slumps so does your investment, which means at the end of the mortgage period you may be short of the balance owed.
There are three main types of investment plans available, the main one tends to be the endowment policy, which has built in life assurance. This is where a life insurance company invests your money for you into a savings plan.
The other popular choices are the individual savings policy, known as an ISA and the pension plan. With both these plans your money is invested into the stock market and your gains are tax fee. These types of mortgage plans are obviously a lot riskier than the repayment mortgage, but the benefits can be huge if your investment selection pays off.
This is why you need to research both options carefully to decide on the best type of mortgage for you.