Which repayment method fits with your life best?
Our professional advisers will guide you through your choices step-by-step. There are three main options:
Repayment mortgage
This involves monthly payments that at first pay the interest on the loan, but later will go towards reducing the loan itself. Once you’ve made the final payment, the mortgage is finished (providing all the repayments have been made).
Interest-only mortgage
You only pay interest on the loan for the entire term of the mortgage. Usually, you also pay into an investment product at the same time (typically an endowment or ISA), and this will be used to repay the full amount of the loan at the end of the term.
Part and Part mortgage
Both repayment and interest-only methods are used to repay the loan. This may happen if, for instance, you already have an investment policy in place before seeking a mortgage.
Mortgages can be variable (where the interest rate rises and falls according to changes in the UK base rate) or fixed rate, (where the interest rate is fixed in advance for a period of time, typically between one and five years.)
Investment vehicles don’t guarantee that the capital will be repaid at the end of the mortgage term, as the value of an investment can go down as well as up - past performance is not a guide to future performance. There could be a shortfall and this would have to be paid at the end of the mortgage.
What next?
View our latest Mortgage Best Buys or contact us using the form on the right to speak to an adviser.
