Mortgage Repayment
On some occasions, upon completion of the mortgage application, the borrower may have the power to decide on how the loan is repaid: this may be on an 'interest only' basis, a 'capital and interest' basis or part interest only, part capital and interest.
Capital and Interest Mortgages
A method where you pay back part of the mortgage capital and the monthly interest. At the outset, most of your monthly payment will be interest; in later years, more of your monthly payment will be repaying the capital. At the end of your mortgage term, you will have paid off the entire loan plus the interest.
Interest-only Mortgages
An arrangement where you only pay the interest outstanding on the loan every month, meaning that the capital sum remains the same throughout the term of the mortgage. These mortgages are not as widely available as they once were. Lenders will now only lend money in this way if the borrower can clearly demonstrate how they propose to repay the capital sum at the end of the mortgage term. Repayment plans may consist of pension(s), deposits or investments, the sale of another property or other land, periodic repayment of capital from irregular sources of income (i.e. bonuses), investment product(s). At the end of the agreed term, the provider will expect the initial lending sum to be repaid in full.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.