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28 May 2024
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Mortgage Repayment Guide

Simple Mortgage Repayment Guide

Which is the Most Suitable Mortgage Repayment Method?

Our Mortgage repayment guide can help you once you have decided on the best mortgage repayment type for your circumstances. You will need to think about how you want to structure the mortgage repayment of the capital debt. Do you wish to take out a conventional repayment mortgage, or back your mortgage with an ISA or endowment policy or pension plan? Alternatively you may wish to simply pay the lender the interest on the mortgage with a view to repaying the debt at some time in the future either from your own resources or maybe from the sale of the property.

Go Direct can help – we have removed the confusion, simply click on a mortgage repayment guide and read the advantages and disadvantages of each mortgage repayment type.

What's a Combination Mortgage?

You can also choose a combination mortgage. This can consist of interest-only parts, repayment parts, or a combination of both of these methods of mortgage repayment methods.

Please note that for any part of a mortgage which is interest-only, the capital must be repaid by you at the end of its term. Therefore for any such interest-only element, you must make arrangements to set up a savings or investment scheme which will provide sufficient funds to repay the capital.

How to Establish Your Best Mortgage Term

Once you establish which way to repay your mortgage you will need to calculate the minimum term your monthly budget will allow you to take the mortgage over. Most mortgage lenders will offer their full range of products to borrowers regardless of the term over which they choose to take the debt – for example, the best two-year fixed rates will be available whether you want to pay over 25 years or 40 years.

By stretching the mortgage term borrowers can bring down their initial monthly repayments. For example, someone taking out a £200,000 repayment loan at a rate of 5.7 per cent would have monthly repayments of £1,020.78 on a standard 25-year mortgage. In contrast, the same loan taken out over 35 years would reduce the monthly repayments to just £901.07 or down to £868.64 over a 40-year term.

Although a longer-term mortgage might improve affordability for young buyer’s, experts are warning borrowers to be aware of the consequences. It is important to be aware that the longer the mortgage term the larger the total interest payable will be, the borrowers should also review their mortgage arrangements regularly, shortening the term at a future date if possible.

Still Confused?

If you're still not sure after reading our mortgage repayment guide we have dedicated Mortgage advisors to help find the best mortgage for you.

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Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

Go Direct.co.uk is a trading style for website purposes of Go Direct UK Ltd.

Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600

We normally do not charge a fee for mortgage advice, however this is dependent on your circumstances. Our typical fee would be £349