Types of Mortgages

Repayment Mortgages | Endowment Mortgages | Pension Mortgages

Repayment Mortgages

Repayment mortgages are where both the capital (the amount loaned) plus interest against it, is paid back over a set number of years, between 20 or 30 years, but it could be less.

Each month you would repay part capital and part-interest. At the outset the proportion of interest in this repayment will be higher than in later years. As the repayment mortgages reduce, and the amount of capital borrowed steadily decreases over the years, the amount of interest payable also decreases. Therefore, in later years, you will be repaying increasing amounts of capital and reducing amounts of interest.

A Low Start Capital Repayment option, usually only available to first time buyers, is essentially where, for a given period of a few years, interest-only is repaid. Then gradually an increasing capital element is repaid. Quite often the initial lower repayments inevitably means higher payments later on.

It is usual for the lender to take out a life insurance policy, to cover the repayment of the capital should you die before the loan is repaid. This would probably be a term policy, co-terminating with the final repayment of capital on the loan.

Repayment Mortgages | Endowment Mortgages | Pension Mortgages