Guarantee - A repayment type mortgage guarantees that your house will be paid off at the end of the mortgage term providing you keep up the agreed monthly mortgage payments. Basically there are two types of mortgages - Interest only and Repayment.
A mortgage loan comprises of two components - the capital sum which is the amount you borrow and the interest you pay on the loan.
Mortgage rates - There are a myriad of mortgage interest rates available for a repayment mortgage. The least risky is the fixed interest rate that guarantees the same monthly mortgage payment for the duration of the fixed term. However, the norm is the Standard Variable Rate (SVR) which is generally tied to the Bank of England base rate.
Mortgage terms - Few people realise that the standard 25 year mortgage term is not a fixed condition to obtaining a mortgage. You can lower your monthly mortgage payments by increasing the mortgage term.
Save thousands of pounds - It is easier than you think to save thousands of pounds on your mortgage. One way is to take a shorter term to pay off your mortgage and the second way is to make overpayments. Both of these ways could save you thousands of pounds in interest on the mortgage loan.
Repayment versus Interest only - The repayment mortgage triumphs over the Interest only mortgage as you don't pay as much interest on the loan. The lender is entitled to demand full payment of the capital sum after the agreed mortgage term which could mean you having your house repossessed.
Why have an Interest only - Some people choose to have an interest only mortgage as they cannot afford to pay both the interest and the capital sum. Interest only mortgages can serve a purpose providing the borrower is made aware of the consequences at the end of the mortgage term.
