When you find that elusive property you want to call your own, you'll need to have a mortgage agreement in place so you can move fast and seal the deal.

Whether you want to organise your own deal or just be able to have an intelligent conversation with an independent financial adviser, take 10 minutes to get your head round the world of mortgages.

Before you begin: Work out your finances
A mortgage is simply a loan with your house as security. How much you can borrow depends on your income (or incomes, if there's two of you) and your regular outgoings. So start by working out what leaves your account every month.

Step 1: Decide on a type of mortgage
There are two basic types of mortgage: repayment and interest-only.

With a repayment mortgage your payment to the lender gradually pays off the amount you've borrowed plus the interest. Your mortgage is guaranteed to be paid off at the end of the mortgage period.

With an interest-only mortgage you just pay off the interest over the term of the mortgage, which means you need to have a way of paying off the capital (the amount you originally borrowed) at the end of the mortgage period. Usually, you plan to build up a fund in parallel (like a stocks and shares ISA) that will do this. In the past, a popular way of doing this was through an endowment - a low-cost savings plan - but poor returns on these have put them out of favour.

Step 2: Find a good interest rate
The other major factor is the interest rate you pay. Most lenders follow what's called a standard variable interest rate (SVR), which rises and falls in line with the base rate (the interest rate set by the Bank of England for lending to other banks). The SVR is usually about 1% above the base rate.

To attract you, most lenders offer special deals at better rates, usually for a set period of time. You can compare these deals by looking in the money sections of newspapers (especially Sunday papers) and on mortgage comparison websites. These deals take different forms:
- Discounted rates. The lender's SVR is reduced by a set percentage for a fixed period. So if the deal is 2% off an SVR of 6.75%, you pay 4.75%
- Base-rate tracker. The interest rate you pay is set at a margin just above or below the base rate and moves in line with it
- Capped. The interest rate is guaranteed not to go above an agreed capped rate, so you know your maximum monthly repayment. If your lender's standard rate goes lower than the capped rate, you'll pay less.
- Cashback. The lender gives you money back in a lump sum or regular payments. This can be handy for moving costs but may not get you the best interest rate

Step 3: Consider a fixed rate
So far, we've talked about variable interest rates. But most lenders also offer fixed-rate mortgages, where the interest rate you pay is set for an agreed period such as two, three or five years.

The advantage is that you know exactly how much you'll repay each month, so it's easy to budget. But if the base rate falls below your fixed rate, you won't see the benefit.

Step 4: Look at the offset option
Current account and offset mortgages link your current or savings account with your home loan, so any money in these accounts goes to reducing your mortgage and interest debt. They're worth considering if you're very organised with your money, have savings, and aren't likely to want to keep switching mortgages to get the best deal.

Step 5: Watch out for penalties
Lenders don't want to make it easy for you to run off to another special deal as soon their offer period is over, which is why they often impose penalties on borrowers looking to remortgage.

Always check the small print to find out what you'd pay if you wanted to switch or repay the loan early. Some lenders offer penalty-free mortgage deals, but the pay-off may be a less competitive interest rate.

It's also worth comparing set-up charges, since many lenders offering special deals charge an arrangement fee/application fee/reservation fee of up to £700.

Step 6: Do you need insurance?
Mortgage payment protection insurance (or accident, sickness and unemployment insurance) offers peace of mind by guaranteeing that your mortgage will be paid off if you can't work following an accident, sickness or unemployment. Rates vary enormously so shop around; don't just opt for your lender's policy.

Most policies only pay out for a limited period, usually 12 months, and then only to a set maximum amount. If you have enough savings to cover a year's mortgage payments, or if you would get decent sick pay from your employer, it could be an unnecessary expense.

Step 7: Apply for your chosen mortgage
Fill out an application form from your preferred lender and wait for them to send you a formal offer. Assuming your lender is happy with your application, you'll be given an agreement in principle, which is usually valid for six months. Now all you have to do is find your dream property to buy with it!