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Useful Information

Jargon Buster

 

Repayment Mortgage
(also known as Capital and Interest)

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You repay the money you borrowed bit-by-bit every calendar month along with the interest on it.

In the early years the monthly payments consist of mainly interest and very little of the initial debt is paid off. Towards the end of the mortgage most of the monthly payment now consists of debt repayment and with less interest.

This can cause confusion in some first-time buyers as they picture their monthly payments going down as the mortgage progresses over the years because the balance outstanding is gradually reducing.

This, however is not the case. As an example, if the interest rate during the term of the mortgage never changed, then the payments each month would stay pretty much the same throughout. It's just how you would expect a normal bank loan to operate; pay x amount each month and in n years the debt is clear.

Repayment

 
Regular monthly payments reducing the debt to zero by the twenty-fifth year on a £75,000 mortgage.

The 'pay-as-you-go' method.

Your home may be repossessed if you do not keep up repayments on your mortgage

Mortgage Repayment Insurance

Equity Release Mortgages