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September 1, 2006
Capital
and Repayment Mortgages
by James Smith
What Is Capital and Repayment Mortgage?
- Repayment mortgage (also called a
capital-and interest loan)
Your monthly payments gradually pay off the
amount you owe as well as paying the interest
charged on the loan. Provided you make all the
agreed payments, the loan will be fully paid off by
the end of the mortgage term. -- Consumer
Information, FSA, June 2006.
Repayment mortgage and capital mortgage (or
capital loan) are the exact same thing, made more
confusing by the fact that this type of mortgage is
known by more than one name. But dont let that
confuse you! Capital and repayment mortgage is, in
fact, the same thing.
How Do I Know Capital, or Repayment, Mortgage Is
Right For Me?
- Repayment/Capital mortgage is great for
those who want to get their entire mortgage,
capital and interest, paid off by the end of
their mortgage term. Once the term is up on this
type of mortgage, youre done and fully paid off.
Many mortgage policies focus on the interest
that you owe. Capital and repayment mortgages
are popular because they allow homeowners to pay
off everything that they owe.
-
- The bank or company that you work with to
determine your mortgage policy and payments can
give you all sorts of options. Make sure to ask
what the interest rate and payment structure on
a Capital or repayment mortgage would be. The
numbers will help you decide whats right for
you. After all, the right mortgage is the one
that you can afford.
Do Capital and Repayment Mortgages Cost More
Than Other Types of Mortgages?
- You usually pay off mostly interest in the
early years and then gradually more of the
capital debt. It may seem as if this is costing
more but that's because unlike the other types
of mortgages you're paying off the capital and
not just the interest. -- Repayment Mortgages,
Mortgage Sorter web site, June 2006.
-
- While capital and repayment mortgages do not
necessarily cost more than other types of
mortgages, you may feel that you are paying out
for a longer period of time with a capital and
repayment mortgage. This is not true, however.
Capital and repayment mortgages just allow you
to pay off your entire mortgage in one complete
payment cycle. And once youre done, youre done.
Thats the beauty of a capital and repayment
mortgage, one of the most popular types of
mortgages used by homeowners.
I Still Dont Know What Kind of Mortgage I Need.
What Should I Do?
- If you know that you want to finance or
re-finance your home or property, its an easy
decision to take out a mortgage policy. The only
problem is, what kind of mortgage will suit your
needs best? With so many options out there, and
so much information about different types of
mortgages available, it can make your head swim.
When youve never had a mortgage before and dont
know that much about mortgages in general, how
do you decide whats best for you?
-
- The only way to know what type of mortgage
will fit your needs is to run the numbers. Have
your bank, financial advisor, or the company
that youre re-financing with gives you examples
of payment plans for many types of mortgages,
and be sure to get your questions answered about
each policy. You will think up many different
questions, some of which can only be answered by
those youre working with to establish your
mortgage. Youll know whats right for you when
you see the plan in black and white, because
youre the only one who truly understands what
your financial situation is.
James Smith has been writing
about Mortgages
and Mortgages UK for many years. Article provided
by ArticleWorld.net.
Because
The Radical Academy publishes essays and articles
on its website does not imply acceptance or
approval of the comments or opinions expressed by
the author of the material. Nor is the Academy
responsible for any misrepresentation of the facts
included. It is your job to be a critical
reader.
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