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Mortgage repayment methods

The Capital Repayment method

The interest-only method
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The Interest-only method

With an interest only mortgage, you pay only the interest to your Lender. This means you need to make a separate payment into some sort of savings plan, so you can build a lump sum to pay off the mortgage at the end of the term. The three main types of savings plans are: endowment policies, ISAs and pension plans. Whichever savings plan you choose, it is vital you keep up the contributions and also make sure your policy is regularly reviewed to ensure it is on target to repay the mortgage at the end of the term. It is important to remember that these types of investment are long term commitments and are unsuitable for people who might not be able to maintain their payments until the end of the term.

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