There are numerous types of mortgage loans available in the market and the plethora of choices can confuse a prospective borrower. Mortgages can be categorized according to their length, interest rates, and the amount that is involved. However there are two basic types of mortgages; fixed interest rate mortgages and variable interest rate mortgage. On the other hand usually the length of the mortgage is either 15 years or 30 years.

• Fixed interest rate mortgages are those that have a pre-determined interest rate that remains constant throughout the term of the contract. However variable interest rate mortgages are those that are connected to a financial index or the prime lending rate. These indexes (such as LIBOR) vary according to market conditions and can either be very fruitful or can impose a heavy interest in the long run.
• Mortgages can be further divided into three other sub-groups namely self cert mortgage, 100% mortgages, and together or Plus mortgage. A self cert mortgage is useful for those who do not have a fixed income and earn their living through commissions or bonuses. For such people it is hard to present a proof of salary even though they may have the money to pay for the down payment.
• In self cert mortgages the disadvantages are that the interest rate is usually higher than traditional mortgages. Moreover the loan to value ratio is usually lower than in traditional mortgages. A 100% mortgage is one in which no deposit is required; this means that the loan to value is 100%. Such mortgages are usually offered to people who are in low income group. Often subsidized by the government in the United States these are a good option for people who are below the poverty line or who all under the median income.
• Together or plus mortgages are developed from the concept of 100% mortgages and are a mixture of 95% mortgage and 30% of the property value in addition to it as an unsecured loan. This means that these mortgages are essentially 125% of the property value; 95% + 30% in unsecured loan. This structure is mandated by lenders’ capital requirements which necessitate supplementary capital for loans of 100% or more of the property value.
• Mortgages can take different forms and can vary from one country to another; the types of mortgages offered in the United Kingdom and Europe are different from the ones offered in the United States. In United Kingdom the lender charges a valuation fee which pays a chartered surveyor who inspects the property in question before any further steps are taken.
• Mortgages come in myriad varieties and some more types of mortgages include – commercial mortgages, eMortgages, location efficient mortgages and foreign currency mortgages. There are hundreds of points that differentiate one mortgage from another; however the fact that houses and property do not come cheap anywhere in the world have provided a market in mortgages that is worth trillions of Dollars.

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