Most mortgages have a variable interest rate which moves up or down depending on the Bank of England’s base rate. A potential issue with this type of mortgage is uncertainty – you could find yourself paying more if interest rates rise. However the opposite is also true; if rates drop so will your repayments.

This type of mortgage guarantees that your interest rate will stay the same for a fixed period which can be as little as one year or as many as ten. The attraction is certainty: you know exactly what your mortgage payments will be right up until the end of your fixed rate term. The downside is that if the Bank of England’s base rate falls you could be paying over the odds, and if it rises you could be in for a nasty shock when your mortgage reverts to the variable rate. Always look to see what early repayment charges are.

The aim of this type of mortgage is to provide the best of both worlds. The rate you pay is ‘capped’ for a fixed period, setting the maximum amount you will have to pay irrespective of how high rates rise. If interest rates fall below the capped level, the rate you pay will fall as well.

This offers you a reduction from the variable rate for a fixed period of time. This can help significantly in the early years but usually involves an increase in your payments when the discount expires. Once again be careful of early redemption penalties.

These are exactly as they sound, giving you an amount of cash when you take out the mortgage to spend as you like. The drawback is that interest rates are usually higher than average.

Trackers are relative newcomers. The mortgage interest rate normally ‘tracks’ the Bank of England Base Rate. The advantage is that you know you are linked to a rate set by independent party rather than your mortgage lender's standard variable rate.

These offer a welcome development in the mortgage arena. They are designed to give you greater control through the ability to make overpayments so you can pay off your mortgage early, reduce your outstanding capital and reduce your monthly interest payments. In some cases they will allow you to underpay or take payment holidays in times of hardship.

Some are linked to a current account allowing you to borrow money at mortgage rates. Others allow you to keep the rest of your finances separate. The better ones charge interest on a daily basis rather than monthly or annually.

Repayment mortgages tend to be more flexible than interest-only types. They suit people who would prefer to avoid risk and to repay the capital as well as the interest on their loan right from the start.

On the other hand, paying your mortgage on an interest-only basis, coupled with a high performing investment vehicle, could be more beneficial in the long run. It all comes down to individual references and circumstances.

Poor maturity values, high charges and inflexibility have earned endowments widespread criticism in the last few years. If you are looking for an alternative there are other repayment vehicles worth considering. Here are some of the most popular:

ISAs (Individual Savings Accounts) have replaced the PEP (Personal Equity Plan) as a tax efficient saving scheme. By taking out an interest-only mortgage and paying a set amount each month into an ISA, the expectation is that by the end of the mortgage term the ISA fund should be more than enough to pay off the loan. Historically, stocks and shares have outperformed many other types of investment. This coupled with the fact that the fund grows free of income and capital gains tax and can be cashed in early, makes the ISA route attractive to many people. The downside is that investing in the stock market is unpredictable. As the small print says, your investment can go down as well as up.

The idea behind this type of mortgage is that you make interest-only payments each month on your loan as well as paying a set amount into a personal pension. The premiums paid into the pension generate a tax-free lump sum, part of which is used at the end of the mortgage term to pay off the mortgage. The fact that the fund grows tax-free is an advantage, but it also means you will get a reduced pension as a result.