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What mortgage repayment options do I have?


The two main methods of repaying a mortgage are repayment (capital and interest) and interest only. It is also sometimes possible to set this up using a combination of the two. 


Speak to us today to find the perfect option for you.



Repayment (capital and interest) method


Under the repayment method, your monthly repayments consist of both interest and capital. Over time, the amount of money you actually owe will decrease. But, in the early years, your repayments will mainly pay off the interest, so the capital outstanding will reduce slowly at the start of the mortgage.


Providing all mortgage payments are made on time and in full, this method ensures that your mortgage is repaid at the end of the term. This means you will own your property. 



Interest-only method


As the name suggests, you will only pay the interest on the amount borrowed and none of the capital, so the capital is still outstanding at the end of the term. 


Therefore, you will usually need to take out some kind of investment policy to save up enough money to repay the mortgage at the end of the term.


Interest-only customers now tend to use Individual Savings Accounts (ISAs) and pensions to build up the final payment sum. This method also means you can take advantage of the tax breaks offered by ISA's and pensions.