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Repayment Mortgages

repayment mortgage mortgage brokers
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Your monthly payments to the lender go towards reducing the amount you owe, as well as paying the interest they are charging. Every month you will pay off a small part of your mortgage, therefore building up equity in your home.  Sometimes this mortgage is also referred to as a “capital & Interest” mortgage and is a low risk method of repaying your mortgage.

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mortgage brokers

This type of repayment method is probably the simplest way to repay your loan.  You can see your mortgage loan reducing every month and it guarantees to repay your loan over the selected term, as long as you meet all monthly payments.

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mortgage brokers

You will find that in the early years your monthly payments will be mainly interest.  If you choose to repay the mortgage or move house during this period, you'll find that the amount you owe won't have gone down by very much however.

Interest-Only Mortgages

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Your monthly payments only cover the actual interest charged on your loan, and do not actually reducing the loan itself. It is therefore important that you arrange some other way to repay the loan at the end of the term in one lump sum (i.e. setting up a suitable investment or savings plan).

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mortgage brokers

By choosing this option you will need to check your investment or savings plan regularly, thus ensuring there are sufficient funds to repay your loan at the end of its term. If your savings or investment plan doesn’t grow according to what was predicted, then you will have a shortfall and will have to think about ways of making this up.

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mortgage brokers

Because this type of repayment method means that you are only paying off the interest, and not the loan itself, your monthly payments will be lower, but this will not increase the equity in your home. This repayment method is suitable if you wish to self-manage the repayment of your loan - typically from the proceeds of selling your home, receiving an inheritance, or savings and investment plans.

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mortgage brokers

It is your responsibility to ensure an adequate repayment method is in place, and if you can't repay it at the end of the term, you could lose your home.

Combined Mortgages

Your monthly payments when combined, means a portion of the loan is treated as a repayment mortgage, and a portion as an interest only mortgage. You will be using both repayment and interest-only methods, to repay the outstanding loan therefore.
This type of mortgage maybe suitable if you already have an existing investment plan in place, or have recently set one up and are considering taking on a new mortgage. For example, if you want to take out a £200,000 new mortgage loan but already have an investment plan that could pay out £100,000 in a number of years time  Then you could consider an interest-only element to cover the first £100,000 and a repayment element for the remaining £100,000.

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Some of the above services may not be regulated by the Financial Conduct Authority

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Thinkofmortgages.com is a trading style for Thinkofmortgages Ltd, which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Think of Mortgages Ltd acts as a credit broker not a lender.
Registered in England & Wales Company 6593593

* We normally do not charge a fee for mortgage advice, however a fee paying option is available. Our typical fee would be £399

 

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