One type of mortgage is called a REPAYMENT MORTGAGE.
This is acknowledged to be the safest way of paying off a mortgage, because if you keep up with all the payments for the length (called the term) of the mortgage, say 25 years, then you are guaranteed to have paid off the mortgage in full and own the house.
This contrasts with something like an interest only mortgage where at the end of the term you still have the lump sum of the mortgage to pay off so could encounter difficulties at that time.
If you have a repayment mortgage, then for much of the time your payments will be higher than when you are on an interest only mortgage, because you are repaying the capital sum of the mortgage all the time gradually and not just interest. However overall you end up paying considerably less, so in the long term it is the better option if you can afford the monthly payments from the get go.
At the start of the term for the first few years, relatively little of the capital sum is paid off and it is mainly interest, but after that period you gradually know that you are paying off more and more of the sum of the mortgage and not just the interest on it which should give you a good feeling. However this is worth bearing in mind if you think you are going to remortgage in the first year or two of the term.
There are various mortgage calculators that will help you to work out what your repayments would be based on the amount of the mortgage and the term, take a look at our mortgage calculator to see what your costs would be on this option.
In summary, a repayment mortgage is a safe way to ensure that you will pay off your mortgage at the end of the term if you meet payments, it is also a popular product and overall is cheaper than interest only mortgages; on the downside it does mean that the monthly payments are higher than some other mortgages which is worth it in the long run but if money is very tight right now then you may wish to consider another mortgage product initially.
More property related articles:
- Spanish Property - Gestors to Mortgage
- Flexible Mortgage Features
- Additional Borrowing on a Mortgage
- Renting Commercial Property
- Green Mortgages