Repayment

How does it work?

You borrow a lump sum over a fixed period of time (usually 25 years but can be shorter or longer). You pay the interest and some of the capital on a monthly basis to the lender.

ADVANTAGES:

1. Some flexibility with repayments.
2. The only way you can be 100% certain the loan will be repaid, providing repayments are maintained.

DISADVANTAGES:

1. Monthly mortgage payments may be higher than interest only mortgages covered by an investment/life assurance product to repay the capital.
2. Only a small amount of capital is paid off in the early years as the monthly mortgage payment consists of a higher proportion of interest to capital repayment.

Your home may be repossessed if you do not keep up repayments on your mortgage.