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In general there are two types of mortgage - interest only mortgages and repayment mortgages. Each of these can have a variety of interest rate types applied to them.

What is an interest only mortgage?

This is where your monthly payment only covers the interest on your mortgage, which means your balance never reduces. You must therefore have arrangements in place to repay the full balance on or before the end of your mortgage term. Maybe you have a guaranteed sum of money due to you at some future date or are contributing to an ISA or Endowment Policy which you will use to repay your mortgage balance. Whilst one of the benefits with this type of mortgage is that your monthly payments may be lower than on a repayment mortgage, it's vital that you obtain specialist advice to make sure it's the right choice for you.

What is a repayment mortgage?

A Repayment Mortgage is sometimes known as a Capital & Interest Mortgage. Your monthly payment on this type of agreement will cover the interest on your debt whilst also paying off some of your outstanding balance.
As such, the balance on your mortgage will reduce over time and providing your monthly payments are maintained as required by the lender, your balance will reduce to zero by the end of the term of your mortgage.

There are a vast number of options available for both interest only and repayment mortgages and by talking to us, we will listen and make sure exactly the right option is identified for you.