There are few different types of Mortgages. These include Fixed Rate Mortgages, Adjustable Rate Mortgages (known as ARMS), and Balloon Mortgages, and the Home Loan Payment relief (HLPR) mortgage. Now I will attempt to explain them a bit so you have a better understanding of them.

Fixed Mortgage Rates are just that fixed and so they remain constant over the term of the loan, the interest and payment amount never changes. If you planning to stay in your home for a long period of time this is probably the best option.

ARMS are interest rate that fluctuates over the term of the loan. Initial rates are generally lower and go higher from time to time during the loan. Advantage is if the interest rates go down so will yours, where on a stardard loan they will not change.

Balloon Mortgages are when the principal and interest payment remain the same for the term of a balloon mortgage which is generally 5-7 years. They are also offered at lower interest rates then other loans.

HLPR Mortgage is a three year adjustable rate mortgage at one percentage point below the national average for such loans. After the three years the rate will adjust to market rates, with rate adjustments capped at 1% per year and 5% over the life of the the loan. An advantage is that after about 7 years you can either payoff the mortgage or apply to refinance, which can lead to home ownership sooner than most loans.

The HLPR mrtgage sounds really interesting, I love the idea of an early re-payment to clear your mortgage, do you know of any negatives of this sort of mortgage please?

HPLR seems to me quite a good package.

A loan tenure of up to 7 years is reasonably long enough to pay of the loan and yet short enough to have flexibility in refinancing.

For me balloon mortgage seems a better choice,as the rates tend to go higher.At the same time the interest rates are lower too.

I prefer the fixed rate mortgage, in todays market arms are what put many people in their positions.  Market values have dropped and if your arm is up you need to refinance because the rate has adjusted and with the declining market you cannot refinance if you owe more than what the property is worth.