Whenever you take a home loan, apart from using a Loan Comparison Calculator, consider these three different types of repayments for you, read along to know the differences and learn more about these repayment options :
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Before we proceed with the three types of repayment options, let us know first the main two parts of every mortgage:
• Capital - The money you borrow
• Interest - Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
• Capital - The money you borrow
• Interest - Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
• Repayment Mortgage |
• Interest-only Mortgage |
This type of payment option is the most popular of the three.
A repayment mortgage is where you need to make monthly repayments within an agreed period of time until you've paid back both your capital and interest. Just be reminded that whenever you start your mortgage, the repayments you make will mainly interest. You'll find out that the amount you owe hasn't gone down by much if you have decided to move house in the early years. • Combined Repayment and Interest-only MortgagesSome lenders may choose between part-repayment and part-interest-only basis when offering mortgages. Both of these options may still have capital unpaid and owed at the end of the term of your mortgage, in the end, each lender still has different rules on their mortgages.
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This type of option is when you would rather pay for the monthly interest only and not including the total amount that you borrowed at the end of the mortgage term.
Like repayment mortgages, you can fix the interest over time and you can pay it at a variable rate. • Paying Back the CapitalBefore choosing an option, your lender might want to check your status to make sure you'll have enough money to pay off your mortgage together with the interest at the end of your term.
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