Home Insurance by Vivid Insurance

Repayment Types

There are two types of repayment you can make to the mortgage company:

• Interest only
• Interest and capital

With and interest only mortgage your monthly payments are only paying off the mortgage lenders interest on the loan, you aren't paying off the actual loan itself. As a result this type of mortgage is relatively cheap per month, but it does mean that when you eventually sell your house you will still owe the mortgage lender the money that you originally borrowed from them. In a period of high inflation this could be beneficial – £100,000 now is worth less in real terms in the future –, or if you are buying a rubbish house and doing it up - so the sale value is likely to be far higher than the purchase price - so this type of repayment method can suit very well in some circumstances. Interest and capital mortgage payment differ in that you are actually paying off the loan from the mortgage firm as well as paying their interest. Because you are paying off more money over the same time period interest and capital repayments are higher than interest only ones, but when you come to sell your house the value that you have outstanding on the mortgage will be much lower as you have been paying it off. Again there are pros and cons to the different methods and it is essential that you talk this over with a specialist mortgage provider who will be able to identify products that suit you and your situation.

Click on the links below for online mortgage providers:

• Central Capital
• Majestic Mortgage & Loans

Don't forget that however much you borrow the lender will expect to be paid whether you are able to pay or not – it makes sense to insure your mortgage payments, so that even if you cannot work through accident, sickness or unemployment your home is safe.
You can get a mortgage protection quote here.