Mortgage Products
Before thinking about what type of mortgage is most suitable for you, the first thing that needs to be considered is how you pay back the capital you borrow and how you pay the interest on it.
The repayment options are:
Repayment Mortgages - Each monthly payment pays off a little of the underlying capital along with interest on the loan. This means that over time the amount of money you owe will gradually decrease and providing all payments are made in full and on time, the mortgage will be cleared at the end of the term. This is widely considered to be the most easy to understand and least risky mortgage type.
Interest Only Mortgages - With this type of mortgage, you only pay off the interest on the loan but not the capital. Once the mortgage term is over, you are expected to repay the capital which you usually need to fund via some kind of investment policy. Mortgage endowment policies used to be the preferred method but more recently people are choosing to use Individual Savings Accounts (ISAs) and pensions as they can also benefit from the tax breaks these products offer.
Below are the various types of mortgage product available.