2. MORTGAGE PRODUCTS
2.1 Types of Mortgage
2.1.1 Repayment Mortgage
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Also referred to as 'capital and interest' mortgages.
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Monthly repayments composed of part capital, part interest. As
the amount of capital is repaid over the period, the portion representing
interest reduces. The overall payment figure remains the same.
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Advantages of this method would be:-
- Guaranteed repayment of loan at end of period.
- More and more capital is repaid as the period advances.
- Because it is not linked to investment products with a finite
term, restructuring the loan on a different basis e.g. longer term,
is more easily accomplished.
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- The whole process must be repeated, and a new repayment term started,
with each house move.
- The terms of the loan may be varied at the discretion of the lender.
- There is no surplus cash at the end of the term.
- Separate life assurance is required to cover the loan.
- There is no investment product to produce 'excess' growth, so
there is no chance of early repayment except by injection of an
outside source of capital
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