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What is a Repayment Mortgage?
A repayment mortgage is the type of mortgage that most people think about. The idea behind a repayment mortgage is that you pay monthly for a set period and each payment consists of an element of capital and interest.
A repayment mortgage is one for which each monthly payment contributes to the capital and the interest that is to be repaid over the term of the mortgage. Assuming that the contractual payment is made each month for the full term of the mortgage, at the end of the term the mortgage will be fully repaid.
With a repayment mortgage your monthly payments consist of both the capital amount borrowed together with accrued interest. Your lender will keep you advised about how much you have repaid.
Initially, most of your monthly payment pays off the interest and what's left goes towards reducing what you've actually borrowed. As time goes on, the 'balance' changes and as the interest charges reduce, more and more of your monthly repayment is used to reduce the loan.
A repayment mortgage is a mortgage contract under which the customer is obliged to make payments of interest and capital which are designed to repay the mortgage over the stated term. As long as you keep up the payments, the whole loan will be paid off over the term of the loan. Many people opt for a repayment mortgage on for this very reason - a repayment mortgage is the safest option as it means that you will have that guarantee.
With a repayment mortgages the entire mortgage is paid back over an agreed period of time. This is referred to as the mortgage's term and is usually set at 25 years. When the mortgage's term has come to an end, providing all the repayments have been met, the property will be in the hands of the homeowner.
A repayment mortgage means that each month you make a payment to your lender which consists of both a repayment of part of the loan and a payment of the interest on your loan.
You are reducing your debt every month, and as a safeguard you will need to arrange life assurance, which is often a compulsory requirement with mortgage lenders so that should you die before the end of the term your mortgage will be paid off.
Deciding which mortgage is best for you depends on a few factors, which is why it's important for you to do your financial homework first. Repayment mortgages are regarded as the safest option, hence their appeal to the more cautious investor. They are certainly much easier to understand and you should have no trouble working out your monthly incomings and outgoings.
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About The Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
MORE RESOURCES updated Fri. August / 07 / 2020
Don't let mortgage rates distract you. You should also consider this when refinancing - Fox Business
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Wells Fargo tells new clients they need $1 million in balances for certain mortgage refinancings - CNBC
Wells Fargo tells new clients they need $1 million in balances for certain mortgage refinancings CNBC
Experts offer tips on buying new home, refinancing amid record-low rates WBAL TV Baltimore
You might have a tough time getting a 'jumbo mortgage' during pandemic. Here's what to expect - CNBC
Mortgage industry faces 'tsunami' of refinancing deals Phoenix Business Journal
Don't make these mortgage refinancing mistakes | Business | swoknews.com The Lawton Constitution
The Tax Breaks for Homes That Help You Now The Wall Street Journal
What is the cheapest way to borrow money? Fox Business
What Is A No-Closing-Cost Mortgage? Bankrate.com
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Should I pay off my mortgage or invest the money instead? | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
Should I pay off my mortgage or invest the money instead? | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
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New SimpleNexus eClosing feature enables mortgage lenders to conduct speedy and convenient hybrid closings of purchase and refinance loans Send2Press Newswire
7 ways to make extra income in retirement Bankrate.com
Mortgage refinance: Everything you need to know Fox Business
Available mortgage credit sees first increase after 8-month low Mortgage Professional America
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Is now the best time to refinance your mortgage? Fox Business
10 things to know before refinancing your mortgage Fox Business
There Has Never Been a Better Time for Co-ops to Refinance Habitat magazine
Figure Names Wall Street Vet Robert Hershy as Head of Capital Markets Effort for Provenance - Business Wire
Figure Names Wall Street Vet Robert Hershy as Head of Capital Markets Effort for Provenance Business Wire
When should you refinance your mortgage? Fox Business
Refinance Applications Surge To Decade High As Coronavirus Fears Push Mortgage Rates To Record Lows - Forbes
Refinance Applications Surge To Decade High As Coronavirus Fears Push Mortgage Rates To Record Lows Forbes
Student Loan Refinancing Rates Fall to New Lows Credible News
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears - CNBC
Record number of borrowers can now save on a mortgage refinance as rates drop from coronavirus fears CNBC
How will these housing trends play out for the rest of 2020? Mortgage Professional America
How does mortgage refinancing work? Bankrate.com
With Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy. Here's Why I Did It Anyway - MONEY
With Mortgage Rates So Low, Getting a Floating Rate Mortgage Might Seem Crazy. Here's Why I Did It Anyway MONEY
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world - MarketWatch
Should I refinance my house? Mortgage rates drop to 50-year low as coronavirus spreads across the U.S. — and the world MarketWatch
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 - Business Insider
I refinanced my mortgage during COVID-19, and thanks to low interest rates I'll save about $50000 Business Insider
The impact of the coronavirus on mortgage refinancings Brookings Institution
The basics of no-closing cost mortgage refinancing Fox Business
Weekly mortgage refinance applications spike 15% as interest rates plunge to lowest in nearly 4 years - CNBC
Weekly mortgage refinance applications spike 15% as interest rates plunge to lowest in nearly 4 years CNBC
Successfully Refinancing Your Mortgage Isn’t Just About Getting A Great Interest Rate. Here’s What Else You Need To Look For - Forbes
Successfully Refinancing Your Mortgage Isn’t Just About Getting A Great Interest Rate. Here’s What Else You Need To Look For Forbes