Simmonds Mortgages

Mortgage Brokers covering Berkshire and beyond

Call: 01344 225 149 or 07979 690 056

Ways To Repay Your Mortgage

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Repayment Mortgages

With a repayment mortgage, your monthly payments to the lender go towards reducing the amount you owe as well as repaying the interest they charge. This means that each month you're paying off a small part of your mortgage.

The advantages

It's a clear approach, you can see your mortgage getting smaller and provided you maintain the required payments, you also have the certainty that your mortgage will be rapid at the end of term. 

The disadvantages

Initially, the majority of your payments go towards interest on your mortgage, which means in the early years, the amount you owe won't reduce be very much.

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Interest Only Mortgages

With an interest only mortgage you only pay the interest charged on your loan, so you're not actually reducing the loan itself. You'll need to have some other arrangement or plan in place to repay your loan at the end of the term. For example - investments, saving plan, downsizing (where you sell your property and buy a cheaper one using the equity to repay your loan), making lump sum payments or changing to a repayment mortgage.

The advantages

If the savings or investment plan you choose performs well, then you could pay off your mortgage earlier compared to a repayment mortgage. At the full mortgage term there may be a lump sum available after the mortgage has been repaid.

The disadvantages

Very few investments or savings plans are guaranteed to repay your mortgage in full. At the end of the mortgage term, you're responsible for repaying the mortgage in full. If your savings or investment plan doesn't cover the full amount, you'll be responsible for paying the difference. Your mortgage lender can demand repayment, and they'll charge you interest on any outstanding balance until it's repaid.

Lump sum payments or changing to a repayment mortgage may not be possible if your circumstances change and you can no longer afford the increased amounts.

Downsizing is not a guaranteed method of repaying your loan as, even if you have enough equity now, house prices could fall and may leave insufficient equity to repay the loan. It is not avisable to rely on house prices increasing as this might not happen.

Some people may hope to rely on inheritance. However, there are several risks associated with this; people can change their wills and, therefore, your inheritance is not guaranteed; the amount you receive may be different to what you expect; you may not have inherited by the time your mortgage term ends or you retire and there can be a delay in receiving funds for an estate. 

Many lenders will only accept certain plans to repay an interest only mortgage. Your adviser will be able to guide you. 

 

Please note: the diagram below is for illustration purposes only and assumes a fixed rate of interest over the term of the mortgage. In reality, interest rates fluctuate.


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Combination Mortgage

It may be suitable for you to pay your mortgage by a combination of repayment and interest only.



We can help you!

If you would like more information or help with your mortgage please call us on 01344 225 149 or 07979 690 056. Alternatively please send us an email at info@simmondsmortgage.co.uk

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

 

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Simmonds Mortgage Services is an appointed representative of Stonebridge Mortgage Solutions Ltd and can source the most appropriate cover from its panel of insurers with a free review of you overall protection and insurance needs. As with all insurance policies, conditions and exclusions will apply.


What our Customers Say...

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

Simmonds Mortgage Services Ltd is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority.

Registered Office: Simmonds Mortgage Services Ltd, Lexham House, Forest Road, Binfield, Berkshire, RG42 4HP. Registered Company Number: 1152 8784 Registered in England & Wales.

There may be a fee for arranging a Mortgage and the precise amount will depend on your circumstances. This will typically be £399.00 paid once the mortgage offer has been confirmed.

There may be a fee for arranging an Equity Release or Lifetime Mortgage and the precise amount will depend on your circumstances. This will typically be £799.00 and is due on completion of the mortgage.

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