Repayment or Interest Only Mortgage

One of your first decisions when taking on a mortgage even before you decide on Fixed, Tracker or Capped etc is do you want a repayment or interest only mortgage.

There are several UK mortgage schemes available for individuals aspiring to mortgage or remortgage a home. So even if you have bought a property before or are looking for first time buyer mortgages getting the right type of loan is important.

Mortgage Calculator UK

Using a mortgage calculator is a big help in the current UK financial climate. It will allow you to get an idea of your monthly budget based on the various interest rates currently on offer.

Our free calculator (on the side of the page) is a "repayment mortgage calculator" if you are considering an interest only loan then the repayments will be considerably cheaper of course.

Speak to an adviser and ask for a free mortgage quote though to get an exact figure.

Selecting a mortgage scheme in the UK market can be a daunting task. Comparison of all the features is essential for a potential home owner.

It is necessary to assess the interest rates and the type of loan before making the critical decision of obtaining a home finance mortgage.  Some of the mortgage interests offered in the markets are quite sneaky. They have some hidden costs that are unknown to the borrowers.

Traditionally, standard variable rates used to be quite straight forward. Standard variable is the basic lending rate for the UK mortgage offering institutions. Most UK mortgages are fixed, but for a certain duration. At the expiry of a fixed term, the new mortgage rate is usually standard variable rate.

The recently experienced serious credit crunch has changed the market for the foreseeable future, as this has made lenders particularly careful when considering applications for a new mortgage.

The UK market is, however, experiencing a slight upward trend; the mortgage financing industry is recovering from the Eurozone crisis. The markets have experienced slow but steady recovery after a difficult period.

A Mortgage is available from two principal sources, i.e. savings from individuals, and borrowed finance from the wholesale market. The wholesale market, as a source of lending UK mortgages, is at risk. This is as the result of a high default rate experienced in the past.  The previous default rate has significantly affected the ability of the borrowers to obtain finances to mortgage a home. It is essential for a prospective mortgage borrower to observe certain requirements to enable him qualify for a mortgage.

The UK mortgage lenders always check the trend of payments of bills. The chances of individuals defaulting to pay bills on time have a slim margin of qualifying for a mortgage. 

Credit card bills etc, must be settled on time to qualify for a mortgage. Another critical criteria is to ensure that the borrower maintains  a credit balance in their current account. This gives assurance to the lender that the borrower has the capacity to service their mortgage. For individuals who are searching for mortgages in a bank or a building society, then using a  mortgage repayment calculator will give you a good idea of the costs involved for a mortgage.

If you are looking for the best mortgage deals then it pays to shop around.

During Eurozone financial crisis, it was observed that the individuals who struggled a lot were those who had more than one debt. The financing institutions are careful in issuing mortgages to individuals with more than one long term debt to ensure that they do not overwhelm them.

More and more people in the UK are opting for an interest only mortgage currently as they appear to be the short term cheaper option.