Whats the Best Way To Repay My Mortgage?
Once you’ve decided on the type of mortgage you want, the next step is to choose how you will repay it. There are two main options – repayment and interest only. Repayment (Capital & Interest) Each payment you make consists of the interest due, together with a portion of capital repayment, which reduces the amount outstanding. Every year, the outstanding loan will go down slightly, until you’ve paid it off completely. In the early years, most of the payment is interest. In later years, however, a greater amount is used to reduce the capital borrowed. It’s advisable to take out a life assurance policy to run alongside a repayment mortgage. You can then be sure that your home will be safe if you or your partner dies. It also makes sense to look at critical illness cover and income protection plans to help meet your mortgage payments if you become too ill to work. Interest Only You only pay the interest on the amount you’ve borrowed until the end of the mortgage term. You will need to mak
