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Interest Only vs. Repayment

How to repay your mortgage
There are two ways to repay the amount you have borrowed (the capital). Their advantages and disadvantages are described below. Repayment Mortgage (also called a 'capital and interest' loan) Your monthly payments gradually pay off the amount you owe as well as paying the interest charged on the loan. Provided you make all the agreed payments, the loan will be fully paid off by the end of the mortgage term

Interest-only mortgage
Your monthly payments cover only the interest on the loan. They do not pay off any of the capital. You will need to arrange to pay into a separate savings or investment scheme/plan to build up a lump sum to repay the capital at the end of the mortgage term. It is your responsibility to make sure you have enough money to repay the mortgage at the end of the term - otherwise you could lose your home.
 

Your home may be repossessed if you do not keep up repayments on your mortgage.
 
 
If we charge a fee for arranging a contract for you, the amount payable will be based on 0.35% of the value of the loan applied for, with a minimum of £500. In a small number of circumstances, it may be necessary for us to charge a higher fee. This will be agreed with you in writing prior to any chargeable work commencing.
 

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