A mortgage is a form of loan, which is taken out against real estate property. This can be an apartment, a house, or even a business-a commercial mortgage; for example, can be taken out against an office, a shop or a factory. There's also Buy To Let mortgages, which are taken against a property the owner intends to rent out to other tenants.

Your mortgage is divided into two parts, the money you originally borrowed for the property-called capital-- and the interest the lender charges on the loan. This separation is important to understand the two main varieties of mortgage: Interest-only and Repayment.

On an interest-only mortgage, what you pay directly is only the interest part of the loan. The capital part is paid off by an investment fund in which you deposit the equivalent amount of the capital. At the end of your mortgage term, this fund should hopefully have grown enough to pay back the capital and even leave you with extra cash. The investment fund payment happens in parallel to the direct payments you make against the interest. If you take this type of mortgage, your lender will normally offer an investment product into which you can make your payments, but you are under no obligation to accept it. It helps to keep informed on what the best deals are. Buy-to-let mortgages are typically interest-only, and available up to 85 per cent of the value of the investment property.

A repayment mortgage, on the other hand, is the only way in which a property is actually guaranteed to be yours at the end of your mortgage. This is because you pay towards both the capital and the interest with every payment until the whole debt is paid. You will pay a bit more every month towards this type of mortgage, but you will be eating into the actual debt, not just interest, and you will not need a separate investment scheme to pay off the property.

There are also 'part repayment, part interest only' mortgages, which are a combination of the two.