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The above figures assume an annual rest type mortgage which recalculates mortgage payments once a year. As such they may slightly overstate the monthly payments for more flexible mortgages, offering monthly or even daily recalculation of payments.
A repayment mortgage is one where mortgage payments cover both interest costs and repayment of the original loan, so that the mortgage amount decreases overtime. An interest only mortgage is one where mortgage payments only cover interest costs. With interest only loans, the mortgage amount does not automatically decrease over time. Frequently, borrowers will set up an ISA, endowment or some other investment product (at additional cost), designed to repay the loan at the end of its term.
Investment products that are set up to pay an interest only mortgages are not guaranteed to pay of the loan amount at the end of the term. The above figures are for guidance purposes only. |
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