A repayment mortgage (capital & interest mortgage) is possibly the most straightforward of mortgage options. In a repayment mortgage, the repayments made by the borrower cover both the interest and a percentage of the capital borrowed. During the early years of the mortgage term, the repayments made will mostly be spent repaying the interest and as the loan progresses, more of the monthly repayment will go towards reducing the capital.

Provided all the agreed payments are made to the lender, a repayment mortgage guarantees to repay the entire loan by the end of the mortgage term. As with most other mortgages, a repayment mortgage is portable, therefore enabling you to move house whilst maintaining repayments. The repayment mortgage offers no built in life cover and therefore a life assurance policy is required during the mortgage term.

As Independent Mortgage Advisors, plusmortgages have access to thousands of mortgages packages from hundreds of lenders. So, to find the RIGHT first time buyer mortgage deal for you either fill out our enquiry form; request a call-back; or freephone 01708 76 55 55 to talk directly with an advisor.

Your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.

An interest only mortgage is a mortgage where the monthly payments made to the lender cover only the interest on the loan. The payments on an interest only mortgage do not pay off the capital borrowed. Usually, in conjunction with making payments to the interest only mortgage, separate payments are also made into an investment vehicle such as an ISA, personal pension or endowment policy in order to build up a lump sum so that at the end of the mortgage term, the invested lump sum is then used to repay the capital borrowed.

The payments made into the investment vehicle are independent to the interest only mortgage and can therefore be reallocated should you wish to remortgage or move home. However, there is no guarantee that the chosen investment vehicle will generate enough funds to repay the capital borrowed at the end of the mortgage term.

Interest Only Repayment Vehicles
There are several different investments that can be used to repay the capital borrowed through an interest only mortgage. These are often known as 'investment vehicles'. The three most common savings vehicles used for interest only mortgage repayment are:

• Endowment
• ISA
• Pension

Endowment
An endowment is a life assurance policy that matures at the same time as the interest only mortgage term ends providing a lump sum that can be used to repay the outstanding mortgage capital. Also, during the mortgage term, the endowment policy provides financial protection that will repay the outstanding mortgage capital in case of death.

An endowment policy is portable and can therefore be reallocated should you wish to remortgage or move home. However, certain endowment policies may carry financial penalties should you decided to stop the policy before the end of the agreed term. Also, there is no guarantee that the final amount in the endowment policy will be enough to repay the balance of the capital borrowed.

ISA
An ISA or Individual Savings Account, is a investment vehicle with an annual investment limit of £7000 set by the government. Under current legislation investments placed in ISAs are tax free, making them very tax efficient investment vehicles. At the end of the mortgage term, the proceeds of an ISA can then be used to repay the capital borrowed.

There are also a wide choice of investments you can use to build up ISA investments, such as cash, stocks and shares and life assurance. If an ISA performs well, your mortgage may well be paid ahead of schedule. However, should the ISA perform badly, there is no guarantee that the final amount will be enough to repay the balance of the capital borrowed. Also, the annual investment limit of £7000 may be unsuitable for some investors with larger mortgage loans. Finally, as there is no life insurance with an ISA a separate life insurance policy will be required.

Pension
A personal pension plan can be used alongside an interest only mortgage where on retirement (or no earlier than age 50) a tax-free lump sum can be taken from the pension in order to repay the capital borrowed. A personal pension is an extremely tax efficient way of repaying your mortgage as not only is the lump sum taken from the pension tax-free, but you will also get income tax relief on your pension contributions.

When using a lump sum from a personal pension plan to repay the mortgage capital, it is worth noting that the lump sum will not be assessable until age 50 or later and that the pension left to live on may be reduced. Also, there is no guarantee that the final amount in the personal pension will be enough to repay the balance of the capital borrowed.

As Independent Mortgage Advisors, plusmortgages have access to thousands of mortgages packages from hundreds of lenders. So, to find the RIGHT first time buyer mortgage deal for you either fill out our enquiry form; request a call-back; or freephone 01708 76 55 55 to talk directly with an advisor.

Your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.

With a fixed rate mortgage the lender will offer a mortgage where the interest rate remains fixed for a given period. Once the fixed rate term has expired the interest rate will revert to the standard variable rate available at that time. The fixed rate mortgage will protect the borrower against possible rises in interest rates making budgeting easier, however if interest rates fall below the agreed fixed rate, the fixed rate mortgage could work out to be an expensive option. Redemption penalties may also apply if the mortgage is repaid or changed during the fixed rate period.

As Independent Mortgage Advisors, plusmortgages have access to thousands of mortgages packages from hundreds of lenders. So, to find the RIGHT first time buyer mortgage deal for you either fill out our enquiry form; request a call-back; or freephone 01708 76 55 55 to talk directly with an advisor.

Your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.

With a discounted rate mortgage, the lender offers a discount off the standard variable rate to the borrower for a set period. The discounted rate will be directly linked to the lender's variable rate and this rate will usually apply for the first few months or years of the mortgage term. The discounted rate may vary if the borrower provides a larger deposit. A discounted rate mortgage may be suitable for borrowers looking to keep repayments lower in the early years of the mortgage, however, redemption penalties may apply if the mortgage is repaid or changed during the discounted rate period.

As Independent Mortgage Advisors, plusmortgages have access to thousands of mortgages packages from hundreds of lenders. So, to find the RIGHT first time buyer mortgage deal for you either fill out our enquiry form; request a call-back; or freephone 01708 76 55 55 to talk directly with an advisor.

Your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.

With a capped rate mortgage, the borrower pays the standard variable rate with a defined upper limit known as a cap. This means that the interest rate is guaranteed not to rise above this level whilst the cap is in place. Furthermore, should the lenders standard variable rate fall, the borrower will still benefit from this lower rate. A capped rate mortgage may be suitable for borrowers wanting security in knowing the maximum monthly mortgage repayment for a set period, whilst still benefiting should interest rates fall.

As Independent Mortgage Advisors, plusmortgages have access to thousands of mortgages packages from hundreds of lenders. So, to find the RIGHT first time buyer mortgage deal for you either fill out our enquiry form; request a call-back; or freephone 01708 76 55 55 to talk directly with an advisor.

Your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.

With a cashback mortgage, the lender agrees to provide a set percentage of the amount borrowed as a cash payment to the borrower on completion of the mortgage. A cashback mortgage is usually linked to a lenders standard variable rate, however it can also be combined with fixed or discounted rate mortgages. There will usually be a tie-in period where the cashback received must be repaid to the lender should the mortgage be redeemed during this period.

As Independent Mortgage Advisors, plusmortgages have access to thousands of mortgages packages from hundreds of lenders. So, to find the RIGHT first time buyer mortgage deal for you either fill out our enquiry form; request a call-back; or freephone 01708 76 55 55 to talk directly with an advisor.

Your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.

With a flexible mortgage, borrowers may be able to make overpayments, underpayments and in some situations take payment holidays in order to best suit their current financial circumstances. Usually, the interest on a flexible mortgage is calculated daily allowing the borrower to immediately see the effect repayments are making on the outstanding loan amount. Flexible mortgages are usually based on the lenders standard variable rate, so fixed, discounted, capped or cashback rates will not apply. However as flexible mortgages are fast becoming more popular many lenders are offering full flexibility at more competitive rates.

As Independent Mortgage Advisors, plusmortgages have access to thousands of mortgages packages from hundreds of lenders. So, to find the RIGHT first time buyer mortgage deal for you either fill out our enquiry form; request a call-back; or freephone 01708 76 55 55 to talk directly with an advisor.

Your home is at risk if you do not keep up repayments on a mortgage or other loans secured on it.