This article gives descriptions of mortgage terminology in the United Kingdom. Introduction The UK mortgage market is one of the most innovative and competitive in the world. Most borrowing is funded by either mutual organisations (building societies and credit unions) or proprietary lenders (typically banks). For a number of years the market operated with minimal state intervention, although this changed at least temporarily following the 2008 nationalisation of Northern Rock, which at the time was one of the country's largest mortgage banks. Since 1982, when the market was substantially deregulated, there has been substantial innovation and diversification of strategies employed by lenders to attract borrowers. This has led to a wide range of mortgage types. Mortgage types Ways to repay the capital Repayment mortgage – in principle, and other things being equal, a flat amount is paid to the lender each month, which covers the interest due for that month on the outstanding loan, plus a repayment of part of the capital. The flat amount is calculated so that the whole of the loan has been repaid by the end of the mortgage term. Interest-only mortgage – where the payments to the lender cover the interest only. No capital is repaid, so that the full amount of the loan is still outstanding at the end of the mortgage term. For example, if the amount of the loan is £90,000, and the interest rate (charged monthly) is 5.6% per year, the monthly interest payment will be {(90000*5.6%)/12}=£420. Endowment mortgage – an interest-only mortgage where the capital is planned to be repaid from the maturity value of one or more endowment policies at the end of the mortgage term. Investment backed mortgage – an interest-only mortgage where the capital is planned to be repaid from the proceeds of an Individual Savings Account (ISA) or other investment plan at the end of the mortgage term. Sometimes these are referred to as ISA mortgages. Pension mortgage – where money from a personal pension scheme is used to repay an interest-only mortgage on retirement. Types of interest rate Variable rate – the rate varies at the discretion of the lender. Standard variable rate – the default variable rate the lender offers to mortgage borrowers with a standard residential mortgage. Tracker rate – a variable rate that is based on a published interest rate (typically LIBOR), plus a fixed interest rate margin. For instance LIBOR +