The two main types of mortgage loans in the UK are repayment and interest only. Quite often people think these are the only options and that they can only choose one finance option (such as using ISA’s) for paying off interest only loans.

But not only should you shop around for the best mortgage deal, you should look for deals which allow you to mix and match your mortgage and finance options to suit you.

There are positive and negative reasons for doing this. On the negative side, some people have been forced because of the problems with endowments to move part of their mortgage to a repayment option as a contingency. Even if you are not using endowments to finance your mortgage, the current volatility in the stock market suggests that you may need to employ this strategy in future.

Positive reasons for mixing mortgage types are the ability to make the best of the mortgage markets. An interest only mortgage lets you control what interest you pay. For example, you can cap the rate if you think interest rates will rise. Or you could also simply chase the sweetest interest rates by switching the interest only mortgage around.

Holding on to a repayment mortgage gives you the security of knowing that part of your mortgage will be paid off, whereas some finance options could go either way – a failure to repay the mortgage in full or perhaps an unexpected bonus.

The idea that you either pay off capital and interest or else save is also passing.

Mortgages can now be financed through pension deals or lifetime options. Some individuals ignore the financial packages offered by banks and instead buy a second property. The buy-to-let mortgage has the advantage that banks are willing to lend even to borrowers with lower incomes because they have the security that the rent will pay off the mortgage. Once the house is purchased, the owners can sell it and their own house and move down, using the capital they have gained to pay off the mortgage on the first home. This can work particularly well where the family buys to let for a student son or daughter and rents the house out to their friends. Picking the right house in or near an urban re-generation zone can yield massive dividends as well as saving on the student loan.

Another way forward is to use the intelligent finance option which allows you to offset your savings and current account balance against mortgage interest. Most of these deals also include the ability to take payment holidays and to mix and match repayment and interest only mortgages, along with personal loans (which are charged at the same interest rate as the mortgage). This very flexible deal is particularly suitable to families with joint income. The trick is to retain the salary in the account and spend from a credit card which is paid off at the end of each month. That way the interest in the current account is maximized along with any other savings the family has. Finally, these deals have the advantage that they can be retained until retirement age (65) which means that if there are problems with financial bonuses from investments, there is space to sort out the problem.

In short, don’t just accept what is offered, look for the best mix for your circumstances.