Mortgage Advice From Ocean- Helping you find the right mortgage for you
When you enquire to Ocean Mortgages you will be given access to leading mortgage lenders through our panel of lenders enabling you to choose from many interest only mortgage plans. We will search our panel of mortgage lenders to find the best mortgage plan for your individual circumstances.
An Ocean mortgage adviser will examine your individual circumstances and discuss the different types of mortgages available. Whether you would like an capital repayment mortgage, part & part mortgage or a interest only mortgage, our mortgage adviser will discuss the benefits and draw backs of the different mortgage types and will be happy to help you through the remortgaging process answering any questions you may have.
What is an 'Capital Repayment Mortgage'?
With a capital repayment mortgage your mortgage debt is divided into capital repayments (i.e. repayment of the money you borrowed) and interest payments (i.e. repayment of the interest you're being charged for the loan). As you make your monthly repayments you are paying off a bit of your original debt and a bit of the interest until the debt has been fully repaid.
Capital repayment mortgages are probably the most popular mortgage type in Britain. With a repayment mortgage you work towards clearing your mortgage by the end of the mortgage term.
With a capital repayment mortgage you are paying back both your interest and the capital part of the mortgage each month, this means that your monthly repayments will be higher than if you had an interest only mortgage but over the term of the mortgage the repayment mortgage will end up cheaper. Also at the end of the mortgage term you will have paid back the debt unlike an interest only mortgage were you will still owe the full mortgage amount from the start of the mortgage.
For example, a £100,000 mortgage at a rate of 5% over 25 years would cost £416.67 per month interest only, and £591.27 per month capital repayment.
A major advantage of a repayment remortgage is that your repayments are fully structured in a way that you know when you will have cleared your debts and will be mortgage free. Every month you pay your lender a mixture of interest and capital with the capital payment you will gradually be reducing your debt. As the mortgage runs you will find yourself clearing more and more of the debt. Most repayment mortgages are set up to last 25 years and towards the end of this term you will be paying back far more of the original debt than interest.
It is important to keep up your monthly mortgage payments and not to fall into arrears as this may be recorded on your credit file and could effect the availability of credit in the future. If you are struggling to keep up with your mortgage, Interest only mortgages offer cheaper monthly payments but you could also reduce your payments by extending the term of your repayment remortgage. While the standard repayment mortgage term is 25 years you may be able to adjust your term longer or shorter depending on your own individual circumstances, or the economic environment. Lengthening the mortgage term will result in lower monthly repayments however you will be paying back more money over the term of the mortgage. Please try our online mortgage calculator to see how changing the mortgage term affects your monthly repayments. If interest rates are low you may reduce your monthly payments to clear you mortgage faster and save money over the term of the mortgage.
There are some circumstances when repayment mortgages are not always the best. Most buy-to-let mortgages are taken on interest-only terms for tax reason. Interest only mortgages may also offer a cheaper way to get on the property ladder and in some instances be cheaper than renting a property.
Speak to an Ocean mortgage adviser on 0800 9169186
who will be happy to help you & answer any questions
you may have about capital repayment mortgages
If you have an interest only mortgage it may be worth considering switching to a repayment mortgage if possible. Ocean's mortgage calculator can assist you to see what the differences are between interest only mortgages and repayment mortgages, although some mortgage plans may have early repayment charges for switching and these must be taken into consideration.
An alternative to a capital repayment mortgage may be a part & part mortgage this is a halfway house between a interest only mortgage & a repayment mortgage.
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