Your home may be repossessed if you do not keep up repayments on your mortgage.
How does it work?
You borrow a lump sum over a fixed period of time (usually 25 years but can be shorter or longer). You pay the interest and some of the capital on a monthly basis to the lender.
- Some flexibility with repayments.
- The only way you can be 100% certain the loan will be repaid, providing repayments are maintained.
- Monthly mortgage payments may be higher than interest only mortgages covered by an investment/life assurance to repay the capital.
- Only a small amount of capital is paid off in the early years as the monthly mortgage payment consists of a higher proportion of interest to capital repayment.