Repayment / Interest Only Mortgages

Mortgages - The Basics

Mortgage lenders agree a loan of a capital amount over an agreed period to enable an individual to purchase a home. During the life of such a mortgage the borrower agrees to pay a rate of interest on the capital borrowed and agrees to repay the capital borrowed by the end of the specific period of time.

As security against the loan the mortgage lender usually takes a charge on the property being bought. This means the property cannot be sold unless the capital borrowed is repaid. The amount lent is usually a percentage of the value of the property being purchased, assessed by the lender’s surveyor. It is unusual for any mortgage lender to loan 100% of the purchase price of a home.

The purchase of one’s home is usually the single biggest investment that most people make in their lifetime. Consequently it is very important that in doing so care is taken to select the most appropriate mortgage for your circumstances. Historically the usual mortgage offered was for a period of 15 years. Today this is no longer the case some mortgages are for as little as 3 and 5 years.