Paying the Capital

You can either pay a little at a time as you go (repayment mortgage) or pay it all off at the end (Interest only or endowment mortgages).

• Repayment Mortgages - This is widely considered to be the most easy to understand and least risky mortgage type. But remember if you do not keep up with repayments the lender can repossess the property
• Interest Only Mortgages - Interest only mortgages have grown in popularity in recent years amongst buy-to-let investors and first-time buyers in particular because, put simply, they are cheaper than a repayment mortgage. However, some experts are concerned that many people taking out an interest only mortgage are not giving enough thought as to how they will repay the capital
• Endowment Mortgages - If the investment performs badly, you could face a shortfall on your loan at the end of the repayment period. In the 1980s endowments were very popular and heavily marketed by lenders.However, many people were not told of the investment risk. This was mis-selling and lenders faced huge claims for compensation.As a result, endowment mortgages have declined sharply in popularity. Relatively few endowments are sold today but there are still millions of policies yet to mature