Just as every person using a first mortgage to purchase real property is different, every mortgage is individual.
First mortgages can be split into 2 general types, dependant on how you pay it back, Interest Only or Repayment.
Interest only
This type of mortgage can sometimes be a cheaper option and is commonly used by people trying to get on the property ladder. Interest is added to the loan on a monthly basis and this is all you repay, so after 25 years of paying, you will still owe the original amount. It is up to you to work out how you repay it at that time, whether you use a savings vehicle, pension payout or arrange another mortgage.
Repayment
A repayment first mortgage not only pays off the monthly interest but also pays off a portion of the loan. At the end of the loan, you will have no amount outstanding and your home will be yours outright. Whilst this may be more expensive in the outset, this gives homeowners a lower risk option for 25 years time as there is the certainty that the loan will be nil.
The choices do not end there. There are also different ways that the interest is modelled.
Fixed Rate
A fixed rate first mortgage guarantees that the rate of interest will not change of a set period of time. So whilst this is usually a higher rate of interest, should the base rate go up, then you can be sure that your monthly budget is not compromised. In the other hand, if interest rates fall, then you will not be saving money.
Tracker
A tracker first mortgage will be a fixed percentage over the base rate, as an example if the tracker mortgage is +2% and the base rate is 1% then the rate of interest you pay is 3%. This is useful if you want to be able to take advantage of the potential drop in interest rates.
Standard Variable Rate
This is usually the lenders default interest rate. It will be much higher than the fixed or trackers available but will have no tie in periods, no early repayment penalties and will normally follow the base rate.