Repayment Mortgages and interest-only Mortgages

Repayment Mortgages and interest-only Mortgages

When it comes to first-time buyer mortgages, selecting the appropriate mortgage can be a daunting task; you are making a decision that will most likely affect your life for the next twenty-five years. So making the best decision to

Receiving the best mortgage rate for your circumstances is a calculated one; for many, that decision will be between an Interest Only Mortgage and a Repayment Mortgage.

Repayment Mortgages and interest-only Mortgages
                                     Repayment Mortgages and interest-only Mortgages

What is a Repayment Mortgage, and how does it work? A Repayment Mortgage requires you to pay both the interest and the capital each month. During the first few years, the majority of your monthly payments will go toward

interest, with only a little portion going toward the capital. However, as time passes, a higher sum will be paid, and the more capital paid off, the lower the interest rate becomes. When the fixed term ends, you will own your home

outright, having paid off both the principal and the interest. What is the difference between an interest-only and a principal-and-interest mortgage? The Interest-Only Mortgage (IOM) is a type of loan in which only the mortgage

Repayment Mortgages and interest-only Mortgages

Repayment Mortgages and interest-only Mortgages
                                 Repayment Mortgages and interest-only Mortgages

Pros and Cons of Repayment Mortgages, In essence, repayment mortgages are the safest option, therefore it’s no surprise that they’re the most common mortgage kind in the United Kingdom. When you pay off your mortgage,

you’re building equity in your home and making it less likely that it would go into negative equity under the Repayment Mortgage. When you decide to relocate, having equity in your existing home will make it much easier.

While the payments are not as adjustable as an IOM, you can change the fixed term length of the mortgage to 30 or 35 years at a later date to keep the monthly payments low. It’s worth mentioning as well that

Repayment Mortgages and interest-only Mortgages

Repayment Mortgages and interest-only Mortgages
                                      Repayment Mortgages and interest-only Mortgages

Leave a Reply

Your email address will not be published. Required fields are marked *