Repayment Methods.

There are two main ways to repay the borrowing. They are usually known as:

(i) Capital and Interest or (ii) Interest Only.

(i) CAPITAL AND INTEREST MORTGAGES (Often called a REPAYMENT LOAN)

Repayments consist of two elements. cheap mortgages.

Capital - which steadily reduces the balance of the mortgage
& Interest, which is calculated on the reducing balance.

The repayments are calculated to ensure that, if they are all made on time, the mortgage will be repaid in full at the end of the agreed period. Repayments are affected by interest rate adjustments and will decrease or increase in line with those changes. Following any alteration in the rate applicable to your loan, the lender will advise you of the revised payment amount.

(ii) INTEREST ONLY MORTGAGES

Payments are used to pay only the interest owing on the mortgage and no contribution is made towards reducing the borrowing. Payments are affected by interest rate changes and will decrease or increase in line with those changes. Following any amendment to the rate applicable to your account your lender will advise you of the revised monthly payment.

Because the payments are intended to cover the interest only, the amount of the mortgage is not reduced and the full amount becomes due at the end of the agreed period of the loan. It is important that suitable arrangements are in place to repay the loan amount outstanding (together with any accrued or unpaid interest) by the end of the agreed period of the mortgage. You will therefore need to contribute to an acceptable Investment or Pension Plan, which will repay the borrowings at the end of this period, or have other suitable investments in place. We would recommend that you obtain advice from an Independent Financial Advisor as to which Investment plan is most suitable for you.

We would also recommend that you have some form of Life Insurance in place to repay the mortgage should you die within the mortgage term.