In the UK, the two main types of mortgages are repayment and interest only. Interest only mortgages offer different repayment routes and different types of interest. Different types of mortgage and different lenders can lead to substantial savings. Lenders nowadays also offer flexible repayment schemes and optional extras.

Additional flexibility is also offered by the ability of the consumer to mix and match mortgage types in the same financial agreement. Financial institutions have also made provision for 100% or more mortgages for first time buyers and for individuals with adverse credit. Mortgage insurance deals have improved. And buy to let has become available even to investors with lower incomes.

In short, it pays to shop around.

But which mortgage will suit me?

Repayment mortgages suit people with conservative financial tastes as they guarantee repayment at the end of the term. However, young couples can also benefit from low start repayment mortgages where they pay interest only for the first few years helping them get a foothold in the housing market.

Because of high house prices, first time buyers may also wish to consider 100% mortgages or mortgages where they are offered higher multiples of their salary than is traditional. Banks feel able to do this is because despite the recent flattening of the housing market, in the long term house prices look set to rise and interest rates to remain low, making the repayments more feasible and the risks of defaulting less (for them).

Interest only mortgages allow buyers to pay interest only but invest in other savings schemes – endowments, unit linked endowments, ISAs and pensions. The theory is that you may gain more from investing than you need to repay in capital to the lender making a saving at the end of the term.

Mortgage repayment insurance is also built into some investments. This theory has taken a knock due to the recent dips in the stock market and endowments mis-selling but these mortgages can suit younger couples with less cash flow, people who move frequently or like to re-mortgage in search of lower interest rates or different interest repayment options – capped, base tracker, fixed or variable – depending on their reading of interest rate trends.

Flexible mortgages allow for overpayments, underpayments and payment holidays. They can advantage couples with families who need the extra cash flow a payment holiday can give or people who find themselves able to pay off their mortgage more quickly. Offset mortgages (also called Intelligent Finance) offer similar facilities and allow interest earned on other accounts with the same bank to offset the interest payments on the mortgage. Interest is calculated on the capital amount and decreases as it is paid off.

People with adverse credit histories or other factors which may make them high risk (such as marriage break up) can take non status mortgages. While interest payments are higher, normally if repayments are kept up for three years, the credit record of individuals will sufficiently improve to allow them to move to a better deal.

Buy to let is also a more popular choice for entrepreneurial types and banks are more willing to lend money for this purpose because they assume that the repayments will be built into the rental price. Once the mortgage is repaid, the rent can be used as extra income or a pension.

Finally, mortgage and re-mortgage deals can include bonuses such as cash back or additional loans which can suit home improvers. However, these deals may involve extra tie in periods or penalties so should be considered carefully before committing