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- Mortgage Service Brochure.pdf (443Kb)
Mortgages
A mortgage is a product that allows you to borrow money to finance the purchase of a property. In return for lending you the money the lender (Bank or Building Society) will charge a rate of interest and take security over the property. This means that until you repay the loan in full, the property is actually owned by the lender.
Most mortgages now are repayment mortgages, also known as capital and interest. This means that your monthly payments to the lender include the interest for that month along with a payment to the capital. This means that the mortgage reduces over time until it is repaid in full.
There is the option for an interest only mortgage whereby, yes you guessed it, you only pay the interest each month and do not repay any capital at all. The advantage is that the monthly payment is less than a repayment style mortgage but the down side is that your balance never reduces.
Historically Interest Only mortgages were normally combined with a savings plan that would grow independently of the mortgage with the view that at the end of the term, there would be sufficient in the savings plan to repay the mortgage in full. The savings plans were normally endowments or pensions although since the ‘endowment miss-selling review’ these style plans are almost extinct, however an ISA is sometimes used.
Interest Only mortgages are mainly used for people who cannot afford the payments of a capital and interest loan or who expect to come into a lump sum in the future from which they intend to repay the mortgage, perhaps an inheritance.
- Interest Rates
- Fixed Rates
- Discount Rates
- Tracker Rates
- Redemption Penalties
- Charges & Costs
- Read our Blogs on Mortgages
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