Different Ways To Repay Your Mortgage



Different Ways to​ Repay Your Mortgage
When you​ are searching for a​ mortgage,​ no matter if​ it​ is​ a​ first,​ second,​ or​ refinance,​ you​ have different options on​ repaying it​ which some people don't realize .​
So,​ before you​ just take whatever is​ on​ the​ paperwork,​ you​ should consider the​ following options:
Capital and Interest Payments
This is​ the​ most common way to​ repay your mortgage,​ since you​ make your payments each month on​ the​ capital,​ or​ principle,​ of​ the​ loan .​
In the​ U.S.,​ this is​ called amortization and in​ the​ U.K.,​ this is​ called a​ repayment mortgage .​
These types of​ loans are set anywhere from 10 to​ 50 years,​ depending on​ the​ lender and where you​ live .​
The payments that you​ give to​ the​ mortgage company each month take a​ percentage and place it​ toward the​ interest and the​ rest goes toward the​ capital of​ the​ loan .​
Earlier in​ the​ loan,​ most of​ the​ payment goes toward the​ interest and toward the​ end most of​ the​ payment goes to​ the​ capital.
Interest only repayment.
While this type of​ mortgage is​ not widely used in​ the​ United States,​ it​ is​ in​ the​ UK .​
Basically,​ in​ this type of​ mortgage,​ the​ capital isn't repaid through the​ term of​ the​ loan,​ instead,​ you​ make regular 'payments' to​ an​ investment account or​ plan that helps you​ to​ build up a​ large lump sum that will in​ turn repay the​ mortgage completely at​ the​ end of​ the​ loan .​
This is​ usually referred to​ as​ an​ investment-backed mortgage or​ as​ any of​ these types of​ mortgages: Personal Equity Plan Mortgage,​ Individual Savings Account Mortgage,​ or​ a​ pension mortgage .​
So,​ when you​ hear any of​ these terms,​ you​ will know what the​ mortgage broker is​ talking about .​
These types of​ mortgages offer some great tax advantages,​ so just ask your mortgage broker about them.
No interest or​ capital payments.
If you​ are an​ older person,​ this might be the​ way for you​ to​ go .​
Some mortgage companies offer a​ mortgage that is​ usually referred to​ as​ a​ reverse mortgage,​ lifetime mortgage or​ an​ equity release mortgage,​ it​ just depends on​ where you​ live and where the​ mortgage company is​ located .​
Basically this type of​ mortgage is​ just compounded each year,​ with the​ interest rolled up into the​ capital .​
The only problem is​ that the​ debt increases each year that the​ mortgage is​ open .​
One of​ the​ reasons that these loans are meant for older people is​ that they are not usually repaid until the​ borrowers pass away.
There are also several other,​ less common,​ ways of​ repaying your mortgage you​ will just need to​ check with your lender to​ see what types of​ payment plans and options they offer before you​ sign your mortgage paperwork .​
You might be able to​ get a​ better payment plan by going with a​ less conventional way of​ repayment.





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