The shape of your millstone

Article Abstract:

There are a number of ways of repaying a mortgage in the United Kingdom. Repayment mortgages tend to be cheaper than paying interest on the entire debt and using a savings plan to repay the mortgage. Endowment policies are often used for these savings plans, though pension mortgages are also available. Pension mortgages are less suitable for younger people since they would have to wait until retirement before repaying their mortgage. Pep mortgages involve using a personal equity plan to repay the mortgage, and savers using this method can transfer to Individual Savings Accounts when they are launched.

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Remortgagors, proceed with caution

Article Abstract:

UK mortgage lenders are competing to attract borrowers and this means that remortgaging may be an attractive option. Borrowers can reduce their interest payments and free capital for a variety of uses such as home improvements or paying off other debts. There are disadvantages such as the higher cost of debt servicing if the debt is increased, the cost of valuations and redemption penalties imposed by the original lender, and reduction in eligibility for income support. Tax relief on the mortgage may also be affected.

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Borrowers can be choosers

Article Abstract:

United Kingdom investors can choose from a range of mortgages. A key decision is whether to opt for a variable or a fixed rate mortage, and this depends on the rate on offer, and whether interest rates appear to be rising. There are likely to be redemption penalties for borrowers offered discounts, though these penalties are only likely to apply for the first few years. Flexibility varies, and some lenders will allow small repayments of capital, while others require a lump sum.

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