When you choose a mortgage, you'll need to think about the repayment method, interest rate deals and special features of some mortgages. The best one for you will depend on your circumstances.
There are two main ways you can pay a mortgage, these are typically called repayment or interest only.
With a repayment mortgage your monthly repayments cover both capital & interest on the loan. During the early years most of your monthly payment is used to pay the interest and a small amount reduces the mortgage size. During the later years this switches round so that most of your monthly payment is used to reduce the capital balance until you have finally repaid the entire mortgage.
As long as you maintain the monthly payment you are guaranteed to repay the mortgage by the end of the agreed term. This repayment method is generally regarded as the safest and lowest risk structure.
With an interest only mortgage, monthly payments to the lender cover only the interest on the loan and you don’t repay any of the capital. The key advantage of this type of mortgage is that your monthly payments to the lender will be lower than with a repayment mortgage however at the end of the mortgage term you will still owe the full amount of the mortgage.
To repay the mortgage you could save money elsewhere. Typical savings for doing this include endowments, pensions and ISA’s. These savings vehicles tend to be investment-based and so will involve degrees of risk that do not apply to a repayment mortgage. Professional Mortgage Services are not authorised to give this kind of advice but we are able to refer you to independent specialists who are.
Having decided which type of mortgage repayment method is best suited to your circumstances the next step is to consider the different Interest Rate Options available
At Professional Mortgage Services we will review your requirements to establish which lender is offering the best product based upon your individual needs.