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An In-Depth Look at Your Options when Paying Back Your Mortgage

So you have done the research – you already know that there are different types of mortgages available to you, and you have also assessed your earnings for the next two decades and have determined that it is enough to repay your mortgage when the time comes. You may even have checked out several properties already, and have done more calculations as well. But there is one other thing that it would be in your best interest to do: determine how you will pay back your mortgage.

There are two basic types of repayments for a mortgage: the standard repayment, which involves capital plus interest, or the interest-only repayment, which, as its name implies, involves only an interest payment and not capital.

What you should know about capital plus interest repayments

The capital plus interest repayment option is perhaps the most common type of repayment, not only in the UK, but in other areas of the world as well. This type of mortgage repayment option is relatively simple: you have to make a set payment to the lender or mortgage firm per month, and this payment is comprised of the capital and the interest associated with the mortgage deal.

As long as you pay this certain amount throughout the lifespan of the mortgage, then by the time the term of the mortgage ends, you will have been able to fully pay for your property. But this is assuming that nothing changes with your mortgage arrangement. If, however, something changes, such as you moving to a new location, your mortgage’s remaining balance as well as your repayment terms will be computed again.

What you should know about interest-only repayments

The other type of repayment for mortgages is the interest-only repayment, which is less common than the capital plus interest repayment. One reason why the interest-only repayment is less common is because it is not that easy to acquire in the first place, particularly if you are a first-time property buyer. In addition, the reason why it is more difficult to acquire is because you are not paying capital – you are simply paying the interest on a piece of property.

Not all mortgage brokers and advisors have access to this type of repayment as well – it is only offered by a chosen few, such as Flagstone in Chelmsford. In fact, this mortgage broker Chelmsford service not only specialises in standard mortgages (like mortgages for first-time buyers, for instance) – it also specialises in more difficult or challenging mortgages, such as large mortgages, mortgages related to buy-to-let investments, and, of course, the above-mentioned interest-only mortgages. If you would like to learn more about interest-only mortgages, you can always visit http://www.flagstone.co.uk/mortgages.

It is important to note, however, that with an interest-only mortgage, you will still owe the lender money even at the end of the term of the mortgage. So when the mortgage term ends, you have to make sure that you have the right amount of money to pay off the entire mortgage. If you do not have the funds at the end of the term, you may have to sell your property in order to clear your mortgage debt.

You should also keep in mind that most mortgage lenders will want to be assured that you have the capacity to pay off the whole mortgage when the time comes. Most of them will ask for documentation and other proof that you are setting money aside or receiving money in the future so they can approve your application for an interest-only mortgage.