The Best Way To Pay Off Your Mortgage

The Best Way To Pay Off Your Mortgage
by Chetan Bhardwa

There are many ways of paying off your mortgage, below are just a few examples of how to do it. So you want the finest mortgage deal possible. With so many available where do you start.

Understanding what deals have to offer is a key factor. A mortgage is simply a loan, secured on the value of a property, which must be paid back over a period of time. 'Secured' simplifies security for the lender, that if you do not pay back the promised amount your house could be repossessed to recover repayments. Normally, events rarely get this far, if you are having financial difficulties, discuss your problems with your lender.

A mortgage term is normally for 25 years, this can be decreased or increased, however it depends on your personal circumstances. The amount which you decide to borrow is called the capital, and there are different ways to pay this. Interest must be paid on the capital which you borrow.

Repayment
This way you can guarantee that the property will be yours at the end of the term. Towards the start of a mortgage deal you will be paying off mostly interest, so if you sell up in the early years you will find you have hardly paid off any of the mortgage capital. Through time, you will be bringing that repayment down rapidly. There are lenders which let you make over payments without getting any type of charges.

A repayment mortgage can be one of the safest way to carry out a mortgage deal.

Interest Only
Any repayments you make each month would be purely paying off your interest only to the lender. You won’t get a chance to pay off any of the capital. After paying monthly repayments on an interest only payment method, you would see large rewards only if your property value increased. With this type of mortgage deal there are high risks involved and is normally suitable for homeowners who are struggling financially.

Endowments
An endowment mortgage is a comparison of an interest-only mortgage. The endowment policy is a mixture of savings, investment and life assurance all tied in one insurance policy.

Endowments normally have high charges, another reason is that investment returns have decreased in recent years. Remember, if this happens with an interest only mortgage, you will need to increase the amount you pay into your investment fund. Endowments are inflexible, costly and unpopular investments which should not be chosen by anybody who are currently on the property ladder.