There are two main types of mortgage repayment method to choose from.
The most common types are the Interest-only Mortgage, and the Repayment Mortgage. Each of these mortgages have their own unique benefits and drawbacks, so it’s important to understand them all before you make a decision.
The Interest-only Mortgage
With this type of mortgage, you only have to pay the interest on the loan each month. The advantage of this is that your monthly payments will be lower than with a repayment mortgage. However, the downside is that you’ll never actually pay off any of the money you’ve borrowed – so at the end of the term you’ll still owe the full amount of the loan.
The Repayment Mortgage
With a repayment mortgage, you pay back both the interest and some of the money you’ve borrowed each month. This means that your monthly payments will be higher than with an interest-only mortgage, but you’ll gradually pay off the debt. This can be a good option if you want to ensure the mortgage is paid back in full by the end of the mortgage term.
However, there is one more option.
And not that many people will have heard about it.
The Part and Part Mortgage
With the part and part method you combine interest only with repayment, all under one mortgage!
You will find more useful information in our article: “What are the different mortgage repayment methods?“
