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, such as making overpayments (more than the normal amount) and under some circumstances taking a payment holiday, making underpayments (less than the normal amount) or borrowing back previous overpayments.

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.