Repayment Options
Introduction To Mortgage Repayment Options
The second major decision that everybody who takes out
a mortgage must face revolves around the method by which
the loan is to be paid back.
Picking the right repayment vehicle is incredibly important
and as ever, there are numerous choices and decisions to
be made that should take into account your personal circumstances,
needs and attitude to risk.
The first decision is whether you want a repayment
mortgage or an interest-only
mortgage.
If you choose a repayment mortgage, then part of your monthly
repayment will go towards servicing the interest on the
loan, with the remainder used to reduce the outstanding
debt.
If you go for an interest-only loan, your monthly repayments
will be solely made up of interest on the sum of money loaned
to you, while your mortgage debt will stay at the same level
for the entire term.
This form of mortgage requires you to select some form
of investment product to accompany your mortgage and enable
you to repay the sum borrowed at the end of the mortgage
term. Mortgage lenders will give you anything up to four
choices:
There is no universally 'best' way to pay back your mortgage
debt, other than by making sure that you keep up your monthly
payments and avoid any risk of losing your home. You should
think carefully about the options open to you, and consider
how your circumstances or needs may change over time before
making your decision.
