This is a subject that has received a lot of media attention this year, which is mainly due to rising interest rates, economic slowdown and the credit crunch. Many households have seen an increase in their mortgage repayments which, when coupled with increased utility bills, rising petrol prices and food, is causing hardship and stress for many households across the UK.

What exactly is a mortgage? A mortgage is a loan taken out for a period of many years, in order to purchase a property. This loan is borrowed from a mortgage lender, usually for a period of 25 years, by which time the borrower will have reached retirement age and so paid it off. The borrower has a responsibility to keep up with the monthly repayments. Failure to do so can lead to mortgage arrears and ultimately, repossession.

There are two types of mortgages:

a. repayment

b. endowment

Repayment mortgages are as the name says: the amount you borrow is divided into capital (the actual sum you've borrowed), and interest (interest on the amount borrowed). A repayment mortgage is repaid each month and is subject to falls and rises in interest rates.

An endowment mortgage is one in which the borrower makes interest only repayments and purchases an endowment policy which then matures over a period of years. The borrower pays into the policy each month with the aim of this having significantly matured so that the rest of the mortgage can be paid off.

However, there have been problems with this type of mortgage with the result that many borrowers are advised to choose a repayment mortgage instead.