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How Different Mortgages Work - Part 1
Anyone looking to buy their first home, and even some people who have had one, two or more mortgages, can be confused by the range of mortgage products available today.
Because the mortgage market is very competitive and all the leading banks and building societies - as well as some specialist lenders - are looking for customers, they are continually updating or amending their products, adding new ones or removing others.
In this short guide, TMP Mortgage Zone, will summarise the two main points you need to consider when choosing a mortgage: paying back the capital and paying the interest.
This week: paying back the capital
Repayment mortgage - each monthly payment pays off a little of the original amount borrowed as well as interest on the loan. At the end of the term the debt is cleared - the original sum loaned and the interest have all been paid back.
Interest-only mortgage - your monthly payment only pays the interest on the loan, not the capital borrowed. At the end of the term, you will therefore be expected to repay the capital.
Next week: paying the interest
[ 08-10-2009 ]
