Mortgage Types

There are lots of different types of mortgage out there but the two major UK mortgages are:

Repayment mortgages :- Also known as Capital and Interest Mortgages

Interest only mortgages:- Payment only on the interest of the loan.

Repayment mortgages will enable you to pay off the entire debt against the lender over a specified time which will eventually make you the rightful owner of your property as opposed to an Interest only mortgage, which only let's you pay off the interest of the loan. This effectively means that you will only own your own property after the "mortgage term" has expired and that you have paid off the original money owed at this time. This will dramatically reduce your mortgage payments upfront but will need a plan to offest the cost of the original loan.

A "mortgage term" is the agreed amount of time that a mortgage can be paid off, this is often twenty five years but can be any specified time. If at the end of the mortgage term you have an interest only mortgage and have no visible means of clearing the amount that you have borrowed from the lender, the lender is perfectly entitled to reposess your property as it is effectively theirs. There are strong arguments against an interest only mortgage, as organising a tax free and interest rich way of saving against the total bill over a 25 year period is often very unreliable and uncertain especially in these current times, although not impossible.

An A-Z of Mortgage types can be found here: A-Z Mortgage Types

Get Advice

The best way of organising a way of paying off any mortgage is to seek impartial advice from an independent financial adviser or mortgage broker. Who will be able to best direct you against what your long term plans are.

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