Capital vs interest only mortgage - Pros and Cons of capital vs Interest only mortgages?

www.remortageyourhome.co.uk Are you confused about the difference between an interest only mortgage vs a capital repayment mortgage. For people who can’t afford to pay for their homes in cash, a mortgage is necessary essentially a loan lent to you from the bank in order to but your home. The bank has two options that you can choose from to repay them, interest only or capital repayment. We will explore in a little more detail; A capital repayment mortgage means every month you pay a little of the loan back to the bank along with any interest accrued on the loan itself over a set period of time. At the end of the set term usually 25 years, the home is yours to keep unless of course you have taken out any further loans known as secured loans. The main disadvantage as seen by some is that it means the monthly payment can be a little bit higher initially but over a period of time this gets lower as you owe less to the bank therefore the interest you pay is lower and you have the peace of mind that at the end of the term you own your home in its entirety. An interest only mortgage on the other hand is where you only repay the interest on the loan you borrowed. With this type of mortgage at the end of the term, you would need to find the total amount you borrowed to give to the bank in full and final settlement of the loan before the home becomes yours. Interest only mortgages has the advantage that your monthly repayments are much lower over the term of the loan however you don’t get the benefit of this amount ever decreasing as you still owe the full capital for the full term and at the end of the agreed term you have to ensure you have the full amount you borrowed to give back to the bank. So you need to ensure you are saving cash each month towards the loan or you have investment plan that will pay off the total owed when the times comes. https://en.wikipedia.org/wiki/Mortgag... Each type of loan has It’s advantages and disadvantages and will very much depend on your circumstances. This is where speaking to a specialist broker becomes worth your while, as the broker will look at your individual circumstances and what you would like to achieve with your purchase, be it your first home to live in or to the steps to start growing your very own property portfolio.