Elevate’s mortgage advisers are always on hand to help clients understand how mortgages work and discuss their most suitable options. We deal with an array of mortgage types for people from all walks of life.
Before starting your mortgage search, it is important to understand the options available to repay the mortgage. Discover key information below and contact our team for further support.
What are the ways of paying back a mortgage?
There are three common ways to pay back a mortgage. These are:
- Capital and interest repayments
- Interest only repayments
- A combination of the above
Understanding these terms and their meanings is an important step to working out what type of mortgage you need. If you’d rather get explanations and assessment from a professional mortgage adviser, speak with the Elevate team at your earliest convenience.
How does paying off a mortgage work?
You will be required to make monthly repayments on your mortgage. If you have a mortgage that pays back the capital (the amount you borrowed) and the interest on the capital, then your monthly repayment will contribute to both. In the early years of the mortgage the monthly repayment will consist largely of the interest due with a small proportion of the capital also being paid. Over time, as the amount owed reduces (due to the capital payments being made), the interest also reduces meaning that a larger proportion of the monthly payment is used to pay off the capital.
With an interest only mortgage the buyer only pays back the monthly interest due on the mortgage but must have a method in place to pay back the capital when required.
Some mortgage types combine aspects of the above two methods of repayment.
Paying back a mortgage FAQs
Are there early repayment charges on a mortgage?
Some lenders will charge you a fee to pay off a mortgage early. You will need to read the terms and conditions of your proposed mortgage to find out. If early repayment is something you want to do, you should inform your mortgage adviser so they can find you an appropriate mortgage deal.
How do payment holidays work?
A mortgage payment holiday is when your lender agrees that you can withhold your monthly mortgage repayments for some time, typically 1-6 months at most. This will extend your standard mortgage repayment period.
What happens if I miss a payment?
If you are going to miss a mortgage repayment, it is important that you communicate with your lender, who may grant a mortgage repayment holiday to support you. Your credit score will decrease due to the missed payment.
Can I pay more than agreed each month?
Overpaying your monthly repayments is possible with some mortgage types. You will need to secure a mortgage that allows you to do this. This could help pay off your mortgage earlier.
Why use an adviser to decide on a repayment plan?
The terms of your mortgage repayments have a significant impact on your ability to repay your mortgage earlier. To avoid entering into a mortgage that doesn’t work for your long-term aims, speak with a mortgage adviser.
Elevate mortgage advisers will explain all of your options and suggest a suitable mortgage for your circumstances. Contact our team today to find out how we can assist you!
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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