Mortgages

Repayment mortgage, interest only mortgages, fixed rate, tracker rate, variable, standard, collared, capped….

Choosing a mortgage can be a minefield! So many choices, types and interest rates! But MoneyBright can make the process simple by providing the information that makes finding the right morgage to meet your needs quicker and simpler!!

Interest Only Mortgages

Interest only mortgages, as you can probably guess from the name, are mortgages where you only repay the interest and you do not actually make repayments on the loan itself. Because of this, it’s essential that you set up some form of savings or investment plan so that at the end of the period of the mortgage, you are in a position to repay the debt itself.

Advantages of Interest Only Mortgages

Because you are only making payments on the interest and not on the loan itself, your monthly payments are likely to be much lower than they would be were you on a repayment mortgage. This frees up money for you – some of which you may decide to save or invest in order to ensure that you are in a position to repay the loan itself at the end of the mortgage period.

Disadvantages of Interest Only Mortgages

Debts simply do not just disappear and if you are not actually making repayments against the loan itself during the lifetime of your mortgage, you will still owe that amount at the end of it. With an interest only mortgage it is vital that you know how you will pay the mortgage at the end of that period. This means setting up a savings or investment plan that will ensure you have enough money at the end of the mortgage to repay the loan. Failing to do so will result in a shortfall that you will have to find some way to resolve.

Repayment Mortgages

Repayment mortgages are essentially mortgages whereby the payment that you make each month goes towards both repaying the debt and the interest. What this means is that, in theory, each month your debt gets smaller.

Advantages of Repayment Mortgages

The main advantage of a repayment mortgage is simply that it’s a very straightforward type of mortgage. As the basic level, you make a payment each month and you see your loan get smaller.

Disadvantages of Repayment Mortgages

During the first few years of your mortgage, your payments will primarily be going towards interest repayments. What this means is that if you decide to sell up and move house within the first few years, or during this time you decide you want to repay the whole mortgage, you’ll find that the actual debt really hasn’t decreased by much at all.