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Getting a mortgage is one of the most important financial decisions you will take in your lifetime. There are many mortgage products to choose from and not all will suit your personal circumstances. That's why you need advice from a qualified mortgage broker who has access to a wide range of mortgage deals including some mortgage products which are not generally available to the public directly. What are Repayment Mortgages (Capital and Interest Mortgages) This is the old fashioned, traditional type of mortgage and remains the only way the property is actually guaranteed to be yours at the end of the mortgage term - provided you have repaid the loan.Your mortgage debt is divided into capital repayments (ie repayment of the money you borrowed) and interest payments (ie repayment of the interest you're being charged for the loan). As you pay off your mortgage every month you're paying off a bit of capital and a bit of interest until the full debt is repaid.You usually pay off mostly interest in the early years and then gradually more of the capital debt. It may seem as if this is costing more but that's because unlike the other types of mortgages you're paying off the capital and not just the interest.  What are Interest Only Mortgages?
And if you can't repay it, your mortgage lender is perfectly entitled to repossess your home. That's why, if you go for this option, you need to organise a way to repay the capital debt. Unless you can be certain of a sizeable inheritance or other windfall, this means saving as you go along. Having a savings plan in place is also referred to as a repayment vehicle. The size of the offset mortgage market is growing all the time, and accounts for a significant proportion of new mortgage approvals. Generally those people who suit offset mortgages have large and volatile incomes (bonuses or successful self-employed) or have significant savings amounts. Is a secured loan right for you? If you're a homeowner and are looking for a substantial loan, a secured loan might be just the thing for you. However, it's crucial to remember that if your loan is secured against your home you could risk repossession if you're unable to make repayments. Whatever repayment vehicle you go for, it involves making a substantial, long-term financial commitment. That's why it's essential to discuss your options with an independent financial adviser who specialises in investment before making your choice. Opting for an interest-only mortgage involves accepting a significant degree of risk. If your repayment vehicle doesn't perform well, you could be left without enough cash to clear your debt. If worrying about this will keep you awake at night, choose a repayment mortgage instead. The majority of mortgage providers no longer ask for proof that you have set up a suitable savings or investment plan before agreeing to an interest-only mortgage. But don't let this tempt you into going without one if you don't have enough money put aside when the time comes to repay your lender, you could lose your home. |
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Our charges are usually 1% of the loan. i.e. £1000 on £100,000 mortgage. The overall cost for comparison is 7.5% APR. The actual rate will depend on your circumstances. Ask for a personalised illustration. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Smart Credit + is an Appointed Representative of Pink Home Loans. Pink Home Loans is a trading name of Advance Mortgage Funding Limited which is authorised and regulated by the Financial Services Authority. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK |
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