If you want to buy a house, what do you do? You check out a series of mortgage loans. How would you select the best mortgage deal? That would hinge on how much you are looking at getting and on the rate of interest that you would be able to afford. Generally speaking, the greater the period of the loan, the lesser will be the rate of interest that you will end up paying.

As far as kinds of mortgage loans are concerned, there are two major types. On the one hand we have the repayment-only mortgages. On the other hand, we have the interest-only mortgages. Let me explain these two concepts to you.

Now, repayment-only mortgages consist of two types of repayments. When you decide to take a repayment-only mortgage, you will be settling monthly installments of both capital and interest. At times, it may seem as though you are paying back a lot more than you would in other types of mortgages. Well, my advice to you would be not to worry too much about it. The only reason that you seem to be paying more is because you are repaying not just the interest but also parts of the capital.

What makes interest-only loans different? How does this work? Well, if you had been paying attention to the mortgage markets a few decades ago, you would have heard of the concept of endowment mortgages. Read on, if you want to get a better idea as to what are endowment mortgages.

An endowment mortgage is a type of interest-only mortgage which entails the borrower to make investments in an endowment fund or some other kind of life assurance policy. Thereafter, the borrower just has to cough up only the interest that accrues on the mortgage. The capital is paid off by the endowment fund. Of course, this has its bad points, for the fund's performance is swayed by market conditions. In the case of the endowment mortgages in the United Kingdom, these flaws were revealed when the markets collapsed in the 1990s. It was a bad time for mortgagers and lenders as the funds performed terribly, leading to losses for all.

Today, endowment mortgages are no longer popular. However, other kinds of more stable, interest-only mortgages continue to be used. Would you prefer a repayment mortgage over an interest-only mortgage or vice versa? In my opinion, that is a matter of choice. Both types have their own good and bad sides. Do exhaustive research and see specific mortgages before you make your final decision.