A mortgage is one of the largest single financial commitments most people ever take on. Buying a property can be stressful and time-consuming, and today, arranging the right mortgage means comparing options carefully rather than simply accepting a lender’s first offer.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayment.
There are main methods of repaying a mortgage, capital and repayment and interest only. It is also sometimes possible to set this up using a combination of the two. A description of these methods is provided below.
Your monthly payments cover both interest and capital, so the balance you owe steadily reduces over time. Payments are weighted toward interest early on, meaning the capital outstanding falls slowly at first. As long as payments are kept up in full, this method guarantees the mortgage is cleared by the end of the term.
You repay only the interest each month, so the capital remains outstanding at the end of the term. This means you’ll usually need a separate savings or investment vehicle to repay the capital when the term ends. Endowment policies were traditionally used for this; ISAs and pensions are now more common, taking advantage of the tax efficiency they offer.
I’m doing my first ever re-mortgage and I have had a million questions and asked for several different options and he has walked me through everything with no jargon and helped me wrap my head round it.”
Charlie helped us so much to get our mortgage and even Michael was every time really helpful. For sure we’ll be back to them again in the future.
