Repayment options
In order to repay your mortgage, you have a choice of two repayment options, a repayment mortgage or an interest only mortgage (which is usually backed by an investment, such as a stocks and shares ISA.)
With an interest only mortgage your payment to your lender simply goes straight towards repaying the interest charged. You don’t repay any of the money you originally borrowed over the mortgage term. You will often have to make other arrangements concerning payments of your capitol. This usually involves paying a separate monthly amount into an investment. However, there is no guarantee that the investment will grow enough to pay off the mortgage in full at the end of the term.With a repayment mortgage you gradually pay off the amount you’ve borrowed over the term of the loan, together with interest. One payment is made every month that goes to your lender, which covers part of the interest your lender charges, and part of the money, which you originally borrowed. The key feature to remember is that provided all repayments are made, the mortgage will be fully paid off by the end of the mortgage term, guaranteed!