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Also known as capital mortgages, Repayment mortgages are the traditional means of paying for a property so that eventually it becomes fully yours as a result of the payments.
Your mortgage payments are divided into capital repayments which are repayments of the money you borrowed and interest payments which are repayments of the interest charged for the loan.
A repayment mortgage is more secure than an investment backed interest only mortgage as you are not dependant on the performance of the endowment or other investment vehicle.
Every month you pay off some of the interest and some of the capital. The monthly repayments on a repayment mortgage will be greater than an equivalent interest only mortgage, however it ensures that your mortgage will be paid in full at the end of the term if you maintain your payments.
In the early years you will be paying more interest and less capital, but in later years more of the payments will go towards the capital balance. Most lenders will allow some overpayments, enabling you to reduce the term of the mortgage, and remember there is nothing to stop you choosing a shorter term than the usual 25 years if you can afford it, again resulting in the mortgage being paid off sooner.
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