Repayment mortgages are ideal if you want the reassurance that, at the end of the loan period, your debt to the mortgage lender will be repaid in full. This type of mortgage is in contrast to an interest-only mortgage where there is no such guarantee.
The way a repayment mortgage works is pretty simple. Each monthly instalment pays off both the capital (i.e. the money borrowed) and the interest charged on the amount outstanding. That’s why you may hear this referred to as a capital and interest mortgage.
Because you are paying off both the capital and interest with each payment, the amount you give to your lender each month is typically more than it would be if you had an interest-only mortgage. But, with a repayment mortgage, there is no need to also put money into a separate investment vehicle.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
(Re-mortgage)
Our rate:
6.29%
Overall cost for comparison is 6.8%
(Re-mortgage)
Our rate:
6.14%
Overall cost for comparison is 7.1%
(Re-mortgage)
Our rate:
7.19%
Overall cost for comparison is 7.5%