Mortgages Explained- An overview of our advice process
We would normally start by selecting how the mortgage was going to be repaid over its term, this is known as the Repayment Method. This is then followed by an analysis into which type of Mortgage Product would best suit your needs.
Mortgage Repayment Methods
Mortgage Repayment Methods are best described below. These are the two ways of paying off your mortgage over the term of the loan. The difference is attitude to risk.
Repayment
Each monthly payment to your mortgage lender consists of capital and interest. Over your mortgage term the loan gradually reduces so by the end of the term, your mortgage will be repaid as long as you keep up to date with your mortgage repayments.
Interest only
The monthly payment to the lender purely pays the interest on the capital borrowed. The loan therefore does not reduce.
A 'repayment vehicle' should be in place in order to pay off the outstanding balance at the end of the mortgage term. Types of repayment vehicle include ISA's, pensions and Endowments. But please note that the repayment vehicle chosen may not pay off the mortgage in full at the end of the mortgage term. Hence this can be the riskier option further down the line.
A 'repayment vehicle' should be in place in order to pay off the outstanding balance at the end of the mortgage term. Types of repayment vehicle include ISA's, pensions and Endowments. But please note that the repayment vehicle chosen may not pay off the mortgage in full at the end of the mortgage term. Hence this can be the riskier option further down the line.
Types of Mortgage Products
Generally the Mortgage Product is selected after deciding on a Repayment Method. Here we describe the different types of Mortgage Product on the market today, along with their pros and cons.
Please click below to follow through to the product description