Being a first time buyer means facing a wall of unfamiliar terms, and the mortgage itself is often the most confusing part. Here’s a plain English rundown of the seven main types you’re likely to come across, what each one means in practice, and who tends to suit each one.
1. Fixed Rate Mortgages
Your interest rate and monthly payment stay the same for an agreed period, usually two, three or five years. That predictability makes budgeting much easier since there are no surprises from month to month.
When the fixed period ends, you’ll typically move onto your lender’s Standard Variable Rate, which is usually more expensive. It’s worth reviewing your deal well before that happens so you can remortgage onto something better.
Best for: buyers who want certainty and don’t want to think about interest rate changes.
2. Variable Rate Mortgages
With a variable rate mortgage, your rate can move up or down. There are two common versions:
Standard Variable Rate (SVR): set by the lender and changeable at any time. Discounted Variable Rate: a temporary discount off the SVR, usually lasting two to five years.
Best for: buyers who are comfortable with their payments changing and want the flexibility that often comes with these deals.
3. Tracker Mortgages
A tracker mortgage follows the Bank of England base rate plus a fixed percentage. If the base rate moves, your rate moves with it.
For example, a tracker set at base rate plus 1% would sit at 6% if the base rate were 5%.
Best for: buyers who want a transparent, rules based link to the base rate and can handle some movement in repayments.
4. Offset Mortgages
An offset mortgage links your savings to your mortgage balance. Rather than earning interest on those savings, the balance is used to reduce the amount you pay interest on.
For example, with a £200,000 mortgage and £20,000 in linked savings, you’d only pay interest on £180,000.
Best for: first-time buyers with a healthy savings pot who want to cut their interest bill or pay the mortgage off sooner.
5. Interest Only Mortgages
With an interest only mortgage, your monthly payment covers just the interest, not the loan itself. At the end of the term, the full amount borrowed is still owed, so a clear repayment strategy is essential.
These are generally considered higher risk and aren’t usually recommended for first-time buyers.
6. Guarantor Mortgages
If your income or deposit isn’t quite enough on its own, a guarantor mortgage might help. A parent or close family member agrees to cover the payments if you’re unable to, which can open the door to borrowing more or accessing better rates.
This is a serious commitment for your guarantor. They become legally responsible for the mortgage if you default, so it shouldn’t be entered into lightly.
Best for: buyers with a family member willing and able to offer that support.
7. Joint Mortgages
A joint mortgage means buying with someone else, a partner, friend or family member, with both incomes taken into account. That combined income can significantly increase how much you’re able to borrow.
Best for: first-time buyers pooling their resources with someone else to boost their buying power.
Not Sure Which One Fits?
There’s no single best mortgage type. The right choice depends on your income, how much risk you’re comfortable with, whether you have savings to offset, and whether you’re buying alone or with someone else.
That’s exactly the kind of decision worth talking through with an advisor rather than guessing at.
How Munro Mortgages Can Help
We guide first-time buyers through the whole process with a simple five step approach:
- Work out your budget: using calculators and a conversation with an advisor to understand what you can realistically borrow.
- Get a Mortgage in Principle: a useful signal to sellers that you’re a serious buyer, and it won’t affect your credit score.
- Find a property and make an offer: we can support you through negotiations once you’ve found the right place.
- Compare the market for you: searching across a wide panel of lenders to find the deal that actually suits your situation.
- Get your mortgage offer: we’ll stay with you through to completion, liaising with your solicitor and estate agent along the way.
Get in touch with Munro Mortgages today to talk through your options and take the first step towards owning your home.
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