1. Repayment Mortgages

Every month you repay a part of the amount you borrowed as well as the lender’s interest charges. Since both capital and interest charges are lumped into one monthly payment, the mortgage will be fully repaid at the end of the agreed term.

These types of mortgages are simple to manage, allowing you to track your payments as well as the outstanding balance.

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   - Provided payments are received in full and on time, you can rest assured that at the end of the term you will have paid off your mortgage.
   - You can pay extra into your mortgage account, reducing both the interest and capital charges you have to repay.

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   - Monthly payments are much higher with this type of mortgage.
   - In the early years most of the monthly repayment goes towards paying off interest, not capital. If you decide to move house, you might find you still have a large outstanding balance on your mortgage.


2. Interest-only Mortgages

Your monthly payment covers only the interest charges on your loan. At the end of the term you will still have to repay the full amount of the sum borrowed. In order to repay the debt you may have to arrange an investment or savings plan, which should accrue enough capital to pay off the loan at the end of the mortgage term.

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   - Monthly repayments are much lower.
   - If your investment and savings plans accrue more capital than the sum needed to repay the loan, you receive this as a cash lump sum.

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   - You still have to pay the full amount you borrowed at the end of the term. However, in so far as the value of the house may increase over the 20 to 25-year term, that payment may be within budget.
   - There may be a shortfall towards the end of the term if the investment and savings plans have not accrued enough capital.

It is strongly recommended you consult a qualified mortgage advisor – we are happy to recommend one. Applying for a mortgage can be complicated but our consultants will work with you to ensure you are properly prepared and receive the right advice.