Types of Mortgage
There are various ways to repay your mortgage. Here is a brief outline of the more popular repayment methods, and their advantages and disadvantages.
What is a capital and interest / repayment mortgage?
A capital and interest (repayment) mortgage is an arrangement where each monthly payment covers the mortgage interest plus a part of the initial capital borrowed. Usually, the mortgage period spans up to 25 years but more recently these are being taken out over longer terms.
Is a Repayment mortgage right for you?
A repayment mortgage is the only guaranteed way of repaying the mortgage. (Provided that you maintain the correct payments throughout the term of the mortgage.)
What is an interest only mortgage?
Interest only mortgages allow you to repay the loan interest, leaving the borrowed amount to be paid off in full at the end of the loan term. The idea is to invest additional money separately in an ISA, pension or other savings plan to repay the capital at a later date or the capital could be rapaid through the sale of the property.
Is an interest only mortgage right for you?
There is a higher risk associated with interest only mortgages because they depend on you investing the money wisely and making enough returns to cover the capital. It’s important to ensure that payments to your chosen savings plan are kept up, or you run the risk of not being able to clear the mortgage. As many investment schemes are linked to the stock market, there is no guarantee that you will make enough to pay off the overall sum.
Part Repayment/Part Investement
This type allows you to use existing arrangements and top up with either repayment or interest only depending on what the existing arrangements are.
For more information and a personalised quotation for your circumstances please click here
With these ways to repay your mortgage, then (with the exception of the repayment method), regular reviews should be carried out to ensure you have sufficient funds to repay your mortgage loan at maturity.
Solar Mortgage Consultancy is unable to provide advice on investment products.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Solar Mortgage Consultancy is an appointed representative of Home of Choice Ltd which is authorised and regulated by the Financial Services Authority.
Home of Choice is entered on the Financial Services Authority register (www.fsa.gov.uk/register/) under reference 302967
The advice and / or guidance contained within this site is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.
|
