There are many different ways to make the biggest financial commitment of your life, and it is worth reviewing what is available and choosing the mortgage best suited to your needs.

With some loans, the interest rate you pay varies roughly in line with the Bank of England base rate, that is known as a standard variable rate (SVR) mortgage. With other deals, the rate is fixed at a certain level for a specified length of time, this is a fixed rate of mortgage.

There are also discounted and capped rates. With the former, the lender trims a certain amount off the SVR for a given length of time. With the latter, the cap means you have the security of knowing that the interest rate won’t rise above a certain level, regardless of what happens to rates generally.

Good fixed and discounted deals are on offer because experts believe that, despite a string of increases, the long term trend for interest rates is downwards. This is because the government wants rates in Britain to converge those on mainland Europe, which are below 4%.

However, problems can arise when the period of the fixed deal comes to an end, some deals require you to revert to the lender’s standard rate at this point. If rates have increased substantially, the leap in payments can be painfully high.

Many mortgage advisers suggest that you opt for a loan that does not include any lock in arrangements or redemption penalties. If you get a fixed loan without penalties, you can walk away if your decision proves to be wrong.

The latter half of the 1990s saw a revolution in the UK mortgage market. New types of loans appeared, known as flexible mortgages, which calculate interest in a different way and which, as the name suggests, offered increased flexibility to borrowers.

There are a number of variations on the flexible mortgage theme, but the core distinction from traditional loans is that money you pay against the debt is credited immediately. With other arrangements, this would happen only once a month or even once a year. Same-day crediting can cut a huge swathe through the total amount of interest paid and allow you to pay off the loan early. No penalties are charged if you do so.

With some flexible loans you can pay more than is required to service the debt and thereby build up a "credit" balance. You can use this subsequently if you need to take a break from payments. If you do not do so, you simply pay off the loan early and save more interest.

The most sophisticated loans are the so-called current account mortgages. This is where you pay your salary into a mortgage account, which provides a cheque book and which can also take care of standing orders and direct debits.

The thinking here is that, for that part of the month before you can draw funds out to meet your living expenses, the money is working to reduce the amount you owe. Drawings on the account gradually increase the debt again, so the amount you owe fluctuates, but the total interest you pay over the month will be lower.

The companies that offer these loans argue that they make your money work harder than a normal account. Their logic is that, if you have £1,000 in your mortgage account which is saving you interest at say 7.74% it is doing more good than if it were in a savings account earning interest at 5%.

Because interest is being saved rather than earned, there is no tax to pay on the 7.74% saved either, making it a further advantage equivalent to earning almost 10% as a standard rate tax payer or almost 13% as a higher rate tax payer. An advantage really worth having over 25 years?

Flexible loans are now heavily promoted by new entrants to the mortgage market, where claims are made such as "traditional high street providers are in some cases, costing their customers almost £20,000 over the odds during the life of a mortgage."

With some flexible loans, it is possible to borrow more than is required to buy the house. For example, Bristol & West’s Flex 3 mortgage offers a loan-to-valuation ratio of 85%. Those who borrow less than this amount have access to the balance throughout the life of the mortgage. So if the house you want to buy is worth £100,000, you can borrow up to £85,000. If, however, you only need to borrow £60,000, you have a £25,000 credit available.