Buying a home is one of the biggest financial commitments a person will ever make.

From making sure it's the perfect home for everyone in the family, it's good value for money and you have the right mortgage that works for you.

Picking the right mortgage for you can be a struggle, especially with property prices fluctuating and mortgage rates increasing.

To help you out, we've broken down the six types of mortgages you can get and picked out their pros and cons with help from experts at Barratt Homes.

Sharing why it's important to make sure you have the right mortgage, Adrian MacDiarmid, Head of Mortgages at Barratt Developments, said: “Choosing the right type of mortgage is important, as it can help save you a lot of money.

"While a fixed-rate mortgage is the most popular option overall, there are a lot of new products available now tailored to specific buyers.   

What are the different types of mortgages?

Fixed-rate mortgage 

A fixed-rate mortgage means your repayments will be the same for a set period, typically two to five or sometimes even ten years.

 This gives you the certainty of knowing what your repayments will be regardless of market interest rates. 

Pros of a fixed-rate mortgage

  • Peace of mind that your monthly payments will stay the same 
  • Ideal for those on a tight budget looking for stability 

Cons of a fixed-rate mortgage

  • If interest rates drop, you won’t benefit from lower repayments 
  • Choosing to switch from certain long-term fixed-rate mortgages early can lead to significant exit penalties  

When a fixed-rate mortgage ends, you will be switched onto your lender's standard variable rate (SVR), or you can remortgage.

When you remortgage you will usually be offered a new rate from your existing called a Product Transfer.

If you want to switch before the deal ends, you’ll usually pay an early repayment charge. 

Oxford Mail: Find out what mortgage works best for you.Find out what mortgage works best for you. (Image: Getty)

First-time buyer mortgages

As a first-time buyer, this is likely the first time you will have encountered conversations about mortgages best suited to you.

Various mortgage products are specifically targeted at first-time buyers, including low-deposit mortgages that offer first-time buyers the potential to secure a property with a lower down payment, and fixed-rate mortgages that offer a stable interest rate for a predetermined period. 

Pros of a first-time buyer mortgages

  • Typically offers lower deposit requirements compared to other mortgage types 
  • Exposure to government schemes and financial help, including lifetime Individual Savings Accounts (ISAs) and shared ownership 

Cons of a first-time buyer mortgages

  • First-time buyers may be offered higher interest rates compared to those with a larger down payment or a more established credit history 
  • Lenders may impose strict eligibility criteria for first-time buyers, making it challenging for those with a limited credit history or lower income 

Oxford Mail: First time buyers may find it hard to know what's best for them.First time buyers may find it hard to know what's best for them. (Image: getty)

Offset mortgage 

Offset mortgages let you keep your mortgage debt and savings with the same bank or building society. Your savings are then used to reduce, or 'offset', the amount of mortgage interest you're charged. 

Pros of an Offset mortgage 

  • It can help reduce the amount of interest you pay on a mortgage 
  • It gives you peace of mind to know your savings are working to reduce your mortgage interest 

Cons of an Offset mortgage 

  • Offset mortgages can be more complex to understand and manage  
  • Payments on the mortgage may increase if the borrower makes a withdrawal from their offset savings 

Tracker mortgage 

A tracker mortgage provides an interest rate that may fluctuate, potentially decreasing or increasing, typically staying below the rate of a standard variable rate (SVR) mortgage.

Pros of a Tracker mortgage 

  • If the base rate falls, your mortgage payment costs will fall 
  • Certain tracker mortgages have a cap, meaning the interest rate won't go beyond a set limit, even if the base rate rises 

Cons of a Tracker mortgage 

  • If the base rate increases, your mortgage payments will increase 
  • You won't know how much your repayments will be throughout the entire deal period 
  • You might have to pay an early repayment charge if you want to switch before the deal ends 

Oxford Mail: A lifetime mortgage is often suited to mature homeowners.A lifetime mortgage is often suited to mature homeowners. (Image: Getty)

Lifetime mortgage 

This is a product designed for mature homeowners that allows them to convert a portion of their home equity into tax-free cash, without the need to sell their home, give up ownership, or make monthly mortgage payments.  

Pros of a Lifetime Mortgage 

  • A lifetime mortgage provides a tax-free income source, allowing retirees to enhance their cash flow during retirement years  
  • Borrowers are not required to make monthly mortgage payments as long as they continue to live in the home

Cons of a Lifetime Mortgage 

  • Interest on a lifetime mortgage accumulates over time, increasing the loan balance and reducing the homeowner's equity and reducing the amount of inheritance for family. 
  • Obtaining a lifetime mortgage could potentially disqualify you from means-tested benefits that you would otherwise be eligible for  

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Cashback mortgage 

This type of mortgage does exactly what it says in the name, it gives you cashback for taking out your mortgage.

When you apply for a cashback mortgage, your lender will tell you how much cashback will be available for you, it is usually a set lump sum of £200 - £1,000. Once your application is complete, you’ll be able to spend the cashback on whatever you’d like. 

Pros of a Cashback mortgage 

  • Provides instant cash - which can be incredibly useful to put towards the costs that occur when buying a home
  • Cashback mortgages may also come with additional benefits, such as refunds on stamp duty, valuation, or legal fees.

Cons of a Cashback mortgage 

  • Cashback mortgages usually have higher initial interest rates than standard mortgage deals, meaning you may pay more in interest in the early years of your mortgage. 
  • There are usually restrictions on early repayments and overpayments. 

You can find out more information on mortgages via Barratt Homes.