How to repay your Mortgage
There are two main ways you can repay your mortgage, this is normally set over a period of time depending on your budget and affordability. Traditionally, mortgage terms were set at 25 years or aligning with retirement. However, depending on your circumstances these have changed with borrowers retiring later and therefore taking longer term mortgages.
Capital & Interest Mortgage
- Also known as a ‘repayment’ mortgage.
- The borrower makes monthly repayments to the lender where the repayments include both
interest charges and capital.
If the customer has kept up with monthly payments throughout the whole mortgage term, the entire loan amount will be paid off at the end.
Interest only
- The borrower only pays the interest on the balance they have outstanding each month. None of the capital is repaid.
- At the end of the mortgage term the initial amount borrowed will still be outstanding.
- To qualify for this type of mortgage the client will need to have an acceptable repayment strategy in place i.e. raising funds through the sale of the property, an endowment, savings or investments.
Part and part
- The mortgage is split into two parts.
- One part is paid back on a Repayment basis and the other on an Interest Only basis.
Speak to a Mortgage Expert
As part of your consultation and fact-find, your Mortgage Expert will talk to you about these options; we will then be able to recommend a tailored solution for you.