Repayment mortgages
A repayment mortgage allows you to pay a monthly amount that covers the interest and the capital of the amount borrowed. It is one of the simplest repayment vehicles, no need to worry about how you might pay off the loan at the end of the term as there should be no amount left if all repayments have been made correctly. It is a point to note that your lender may require you to take out life insurance on top of the mortgage repayments in case you do not live to see the end of your mortgage term.
The main up side to a repayment mortgage is that it is uncomplicated and easier to understand than some other mortgages. The risk of investing in the stock market can also be avoided using this method.
On the other hand however you do not benefit by a rise in the stock market or an improvement in pension, ISA (Individual Savings Account) or endowment mortgages. A repayment mortgage does not offer you the ability to do well if the stock market rises. Another major consideration of taking a repayment mortgage is that to keep the initial monthly repayments lower the time taken to repay the mortgage is extended. 25 years would be normal and unless you receive a lump sum from an external source you are going to be unlikely to be able to repay the loans any quicker than the full term. This is not always the case with other types of mortgage that may be paid earlier if the financial markets perform well.
Repayment mortgages don't change much but it is a good idea to get in touch with us so we can keep you up to date with all the elements of a repayment mortgage.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBTS SECURED ON IT.
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