Merchants Wealth Management can help to interpret the variety of repayment methods, interest rate deals and other factors that influence decision-making. Our mortgage advisers offer professional advice without being tied to any single mortgage lender
When you have decided which mortgage is suitable for you, the next step is to choose how you want to repay it. There are two options available: 'Repayment' (also known as 'Capital and Interest') and 'Interest only'.
This is the safest way to pay back your mortgage. It means that you repay both the capital and the interest over the term of your mortgage. In the early years, the bulk of your monthly payments go towards paying off the interest but as the mortgage matures, a greater percentage is used to repay the actual capital back.
With Interest Only Mortgages, the lender receives only the interest on the amount you have borrowed during the course of the mortgage. This means that at the end of the mortgage term, the capital amount borrowed will still be owed and the borrower must therefore have the means to repay it. This is usually achieved by investing in a separate policy that yields the necessary amount on maturity, for example, an endowment ISA or a Pension scheme.
As the name suggests, this type of mortgage is subject to variable rates of interest, which means that your repayments can fluctuate from month to month. When the lenders standard rate of interest rises, so does your mortgage premium, but if their interest rates fall, then you end up better off. This type of mortgage can make accurate budgeting a bit difficult.
Fixed Rate mortgages remove the uncertainty of what your monthly mortgage payments will be because they are fixed at a set rate for a set period of time. This is great if interest rates rise, but if they fall below the rate you are paying, then you may end up losing out. This kind of mortgage often imposes a penalty charge if your repay your mortgage early.
This type of mortgage is designed to help borrowers to meet their repayments at the start of the mortgage term by offering a lower variable rate of interest for a limited period of time. It has the benefits and risks associated with a variable mortgage.
There are many other options available and other considerations that require your attention. Our advisers have access to the very latest mortgage information and they will always keep you informed and in touch.
YOUR HOME IS AT RISK IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT.
Suitable security and adequate life cover may be required by the lender. As licensed credit brokers, written quotations are available on request.
Merchants Wealth Management Limited could charge different level of fees depending on circumstances.