These are terms which have been concocted by lenders over the years and come to be accepted to describe, in broad terms, different types of loans (mortgages) that are available from them.

Discount mortgage. Most lenders have what they describe as their 'standard rate' There was a time when all lenders had more or less the same standard rate and wherever you went for a mortgage you would end up paying the same!

Competition has now come into play, however, and lenders have different 'standard rates' From such standard rate they will, as an incentive, offer a discount . In theory such discount can be for any amount and for any period, but in practice you will find offers such as '2% discount for 2 years' or similar. With discount mortgages you must remember two things in particular:

1. The discount is from the lender's standard rate - if that standard rate alters up or down you must remember that your discount is always geared to the standard rate and therefore while such discount will not alter, the relevant monthly instalment you are making will also go up and down accordingly.
2. It is very important to know what happens when the discount period comes to an end - watch out for penalties which can tie you in to the lender at what might be a high rate of interest. Avoid short term low discount interest rates which are often simply 'gimmicks' and a prelude to a much longer high interest rate! (There is no such thing as a free lunch as they say!)

Fixed rate mortgage. This is a rate of interest which the lender agrees to charge you for a specific period. What happens to interest rates generally during the period of the fix (sorry!) will not affect the rate you are paying, or the monthly instalment. Again, such fixed rates can be just for a few months, a year or two or three, or indeed for the life of the mortgage.

Capped rate mortgage. The lender agrees to 'cap' the rate of interest which will be charged for an agreed period. This means that whatever happens to interest rates generally the interest rate you pay will not rise above the capped figure during the period of the cap.. (Certain lenders who are ultra cautious have also added a collar to the cap - effectively saying that if there was a dramatic fall in interest rates there would be a level (the collar) below which interest rates would not fall. Some lenders wish they had included this clause in their agreements some time ago, bearing in mind the current low interest rates!

Cashback mortgage. Here the lender will give you an actual rebate by way of a cash sum (usually paid to your solicitor) which could range from a comparatively small amount to assist with legal costs for example, to 5% or more of the sum you are actually borrowing. There are occasions when it is tempting to take out such a mortgage, but the tie - ins and penalties can be particularly severe and the pros and cons of such a mortgage need to be carefully considered. Broadly speaking, they are to be avoided, and in any case they have largely been withdrawn by lenders.

Tracker mortgage Another product name which has arrived over the last couple of years- simply means that the rate you pay tracks - that is follows - either base rates (what we used to know as bank base rates) or  occasionally another rate which the lender uses for this purpose. Main advantage is that there is no long waiting period between general interest rates altering and your mortgage rate doing the same. Great idea when interest rates are falling but a bit of a pain when they are on the increase! Borrowers who are fortunate enough to be on long standing tracker rates have seen their mortgage rate and subsequently repayments fall dramatically in recent months.

Flexible mortgage Another fairly new innovation. Depending on which lender's flexible product it is, you can overpay your mortgage, underpay or take payment holidays, (with conditions of course) enjoy the benefits of daily interest rate charging, have a cheque book, and often much more. Only really worthwhile if most of these benefits appeal to you and you can positively take advantage of them as the interest rates are not always very attractive. The flexible benefits which most people want - daily interest rate charging, ability to put in lump sums or increase monthly repayments to repay the mortgage quicker are available with many mortgage arrangements these days with a  more competitive interest rate. However this type of mortgage can be particularly attractive to the self employed or borrowers who have funds coming into their possession at varying times and which they can pay into their mortgage account and 'offset' the mortgage interest charged.  See following paragraph for more information.

Current, offset. or aggregate account mortgage Yet more names for the vocabulary! An extension of the flexible type mortgage. Basically your normal current account which is deemed to hold your spare cash (what spare cash did we hear someone mutter?) and your mortgage account are rolled into one and - so the theory goes - the credit on your combined mortgage and current account will effectively reduce the interest you have to pay on your mortgage thus reducing the eventual term of this. In the right circumstances a great idea, but certainly not for everyone especially the type of person who sometimes has to decide whether to pay the mortgage or the grocery bill!  Some lenders also market mortgages which they call off-set mortgages which are broadly similar. Offset mortgages have become far more in demand of late.  With interest on savings so low iat present there is certainly an argument for not saving (unless vitally important to build up a cash balance) and putting the cash you might otherwise have saved into the mortgage account to reduce your mortgage and increase the value of your property asset.

There are numerous other mortgage products about but most are centred in one way or another on one of the above. And which one is best? We were afraid you might ask that as quite honestly the answer is ....... it depends! It depends on your expectations and/or fears regarding interest rates, whether you want the stability of a fixed rate or believe that if interest rates are on a downward trend you will latch on to a tracker or discount mortgage. If you have substantial or irregular sums of cash in your bank account you may contemplate a current account mortgage .... and so it goes on.

As always the important thing is to explain your circumstances and your aims to us and we will discuss the various alternatives with you and point out the advantages and disadvantages of each, and explain the small print which can be vitally important!