Your Mortgage Solution
REPAYMENT MORTGAGE - On a repayment mortgage the borrower pays the lender a monthly amount, which repays part of the debt and part of the interest on the loan. If you pay all your monthly instalments in full, your mortgage will be paid off at the end of the agreed term.
The advantages are that you are certain to clear your debt as long as you keep up your monthly repayments and this type of mortgage is very simple.
The disadvantages of a repayment mortgage are that your monthly payments are likely to be higher than for an interest-only option and that only a small amount of the capital is repaid in the early years. To protect against the possibility of being unable to repay the loan in the event of death, it is advisable that you take out separate life assurance.
INTEREST ONLY MORTGAGE - With an interest-only mortgage your monthly payments only cover the interest on the loan - they do not pay off the loan itself. So you will need to make separate arrangements to pay off the loan when the mortgage ends.
