As Independent Financial Advisers, RBR Jacobs has access to a vast range of the best-buy mortgage deals.
A mortgage is the largest single transaction in most people’s lives. Buying a property can be a stressful and time-consuming experience, although nowadays the financing of a mortgage is a case of finding and selecting the best deal, rather than simply accepting a lender’s offer.
Hundreds of banks, building societies, and smaller niche lenders compete for your business, all offering a variety of interest rate deals, associated fees and other enhancements to attract borrowers.
There remain two main methods of repaying a mortgage loan, although it is possible to set up the loan on a ‘part and part’ basis. A description of these methods is provided below.
Repayment (capital and interest) mortgages
Under a repayment mortgage, your monthly payments consist of both interest and capital - hence, over time, the amount of money you actually owe will decrease. In the early years, your repayments will be mainly interest and the capital amount outstanding will reduce slowly to begin with. Whilst this method ensures that the loan is repaid at the end of the term, it is generally more expensive at the outset.
Interest only mortgages
As the name suggests, with an interest only mortgage you only repay the interest on the loan. At the end of the term the capital is still outstanding. Therefore, you will usually need to take out some kind of investment policy to save up enough to repay the capital loan at the end of the term.
Traditionally, the preferred product for repaying the capital element of an interest-only mortgage has been a mortgage endowment policy (which included a set amount of life cover) – although more recently borrowers are using ISAs and pensions to build up a sufficient sum, whilst at the same time taking advantage of the tax breaks offered by these products.
If you would like to know more about the services we offer, please contact us at:
enquiries@rbr-jacobs.co.uk