Which Type of Mortgage is Best for You?

You'll have a lot of important decisions to make when buying your first home - and choosing the best type of mortgage for you is certainly one of them. There are many mortgage deals for first time buyers on the market, each offering different features and benefits, so you may find it difficult to choose the one that suits you most.

However, below you'll find information on the different types of mortgages that are available, to make it easier for you to make a decision. Answer our questions and you'll be a step closer to finding the best first time buyer mortgage deal for you.

You'll have a lot of important decisions to make when buying your first home - and choosing the best type of mortgage for you is certainly one of them. There are many mortgage deals for first time buyers on the market, each offering different features and benefits, so you may find it difficult to choose the one that suits you most.

However, below you'll find information on the different types of mortgages that are available, to make it easier for you to make a decision. Answer our questions and you'll be a step closer to finding the best first time buyer mortgage deal for you.

Firstly, how do you want to pay your mortgage back?

The mortgage deals that are available to you may be affected by how you wish to repay your mortgage. There are two ways to pay your mortgage back:

Repayment mortgage

A repayment mortgage means that on a monthly basis, you are paying back a portion of the money you've borrowed, as well as the interest payable on your loan.

The benefit of a repayment mortgage is that at the end of the term, you will know you've repaid the entire amount you've borrowed, as well as any interest, so you will own your home outright.

Interest only mortgage

By selecting an interest only mortgage, you will only pay the interest on a monthly basis, and so will not reduce the amount you borrowed; meaning the size of your mortgage will remain the same and not reduce over time.

This means you are responsible for making suitable arrangements for the loan (called a repayment vehicle) to ensure it is repaid at the end of the mortgage term and providing evidence of this.

It should be noted, however, that many lenders - including the Newcastle Building Society - currently don't offer interest only mortgages.

Which type of mortgage deal would be most suitable for you?

There are three main types of mortgage for first time buyers on the market that you can choose from, all of which are explained below. You can also compare different mortgage types with our useful mortgage comparison tool, and calculate how much your repayments are likely to be with our mortgage repayment calculator.

Fixed rate mortgage

A fixed rate mortgage allows you to fix your interest rate, so you'll pay back a set amount each month for a designated period of time - for instance two, three or five years, although there are some 10 year fixed mortgage deals.

The advantage of a fixed rate mortgage is you know exactly how much you will have to pay each month so you can budget more easily.

Variable rate mortgage

A variable rate mortgage is linked to your lender's underlying mortgage rate, known as their standard variable rate (SVR).

This can vary (and not necessarily in line with the Bank of England base rate), which means your mortgage payments can go up or down.

Base rate tracker mortgage

A base rate tracker mortgage changes usually depending on what the Bank of England's base rate is, meaning it can go up or down each month. If the rate rises then your mortgage repayment may increase; however, if the rate decreases you may benefit from a reduction in your monthly repayment.

When you are choosing a first time buyer mortgage, you will also need to consider how much you have for a deposit, as this impacts how much you can and need to borrow. Before you start searching for your first home, you will need to find out how much you can borrow and may even be required to provide a Decision in Principle to some estate agents - for more information on this, take a look at our 'How much can I borrow?' page, and use our mortgage affordability calculator to find out how much Newcastle Building Society may lend you.

Your mortgage will be secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.