Types of MortgagesTaking out a mortgage is most likely to be your biggest step. Whether it is your first or you’re moving up the property ladder. As the most sizeable loan you’ll ever take out, choosing the right type is essential. Choice, while at the first glance looks bewildering,, taking professional advice will clear a path. Firstly there are two repayment methods, a capital and repayment mortgage or an interest only mortgage with another source of savings or investment to clear the debt at the end of the term. How your mortgage is repaid
Flexible MortgagesFlexible mortgages allow you to increase or decrease your monthly payments or even take a short payment holiday. Remember any underpaid interest or payment holiday will be added to the mortgage debt. An overpayment will reduce the mortgage debt. Essentially, a flexible mortgage falls under the repayment umbrella. Some lenders also include a drawdown facility within the original loan at a pre-agreed limit. By overpaying you will be reducing either the debt or the term of the mortgage. Offset MortgagesAn offset mortgage is another way to reduce the overall cost of your mortgage. You will have two accounts, a mortgage account and a savings account, or even a current account, from the same lender. Money is paid into the savings account and this is used to pay the mortgage each month. If your savings account balance is more than required then the interest balance owed, is reduced. You can, with some lenders, use your credit balance to either reduce the mortgage debt or reduce the term of the loan. Your home may be repossessed if you do not keep up repayments on your mortgage. |
