Types of Mortgage
The world of residential mortgages can be a minefield to the uninitiated. This section aims to demystify the types of residential mortgage available and will help you to select the right mortgage for you. Use the navigation bar on the left to find out about fixed rate mortgages, tracker mortgages, discount mortgages and offset mortgages.
Interest only Mortgage or Repayment Mortgage? What do these this terms mean?
Interest Only Mortgage
With an interest only mortgage your monthly payments are simply the interest on the mortgage loan and NOT the actual mortgage loan itself. This means that your monthly payments do NOT reduce the actual loan amount. It is there for important to have some other investment plan in place in order that you can pay off the mortgage at the end of the loan term.
Also known as a Capital and Interest Mortgage. Monthly payments on this type of mortgage will cover the interest on the mortgage, plus a specified amount of the actual mortgage loan, thus reducing the loan amount each month.
For more information on mortgage industry terms why not use our mortgage jargonbuster glossary?