Repayment Mortgage. With this type of mortgage each month
you pay interest on the money you have borrowed AND you
pay back some of the money you have borrowed. By the end
of the mortgage term you have paid back all the money you
borrowed and all the interest charged. A capital repayment
mortgage is generally considered to be less risky than an
endowment, ISA or pension mortgage as it does not depend
on investment returns.
Interest only mortgage. With this type of mortgage all
you pay each month is interest. You do not pay back any
of the money you have borrowed until the end of the term.
If you choose an interest-only mortgage you must make sure
that you will have enough money to repay your mortgage at
the end of the term. Many people with interest-only mortgages
use an endowment, personal pension plan or ISA. These types
of mortgage are generally considered more risky than a repayment
mortgage as they depend on investment returns and there
is usually no guarantee that there will be enough money
at the end of the term to repay the mortage in full. This
type of mortgage usually has lower monthly payments than
a repayment mortgage, but you should remember to add in
the cost of any endowment policy you have to pay as well.
You should also remember that if your endowment policy does
not pay you the amount you need at the end - you will still
owe the remaining amount on your mortgage.
If you are not sure what type of mortgage you need, please
contact the SmartMole
team.
Mortgage Term. This is the length of time (in years) over
which you would like to repay your mortgage. The minimum
term for most lenders is 5 years. Many people take their
first mortgage over 25 years. Ideally, you should aim to
have repaid your mortgage by the time you retire. If you
are using an existing savings plan or insurance policy in
connection with your mortgage, such as endowment policy,
the term selected should match the remaining term on your
policy.
Be sure to think of the term you require when using the
calculator.
