Some people with interest-only mortgages choose to save/invest for the bulk of the debt elsewhere. The amount of debt never goes down, and so neither does the amount of interest. This means your monthly mortgage payments are much lower - but you won't own the property at the end of your mortgage term.Īn interest-only mortgage costs more overall, because you're paying interest on the principal debt every month. With an interest-only mortgage, you only pay back the interest on your principal debt (the original sum that you borrowed from the mortgage lender). By the end of your mortgage term (usually 25 to 30 years), you will have repaid everything and own your house outright. With a repayment mortgage, you pay back some of the principal debt every month. There are two main ways of paying for a mortgage: Interest only and Repayment. There are mortgages on the market that allow for 35- or even 40-year terms, but while this will reduce your monthly repayments, they will cost you a lot more in interest overall.Įxplore all our mortgage calculators Interest only vs. You will notice that the mortgage term will dramatically impact your monthly repayments. These are the average mortgage rates for 2, 3, and 5-year fixed rate mortgages. If you don't know the mortgage rate, the calculator has three example rates that you can use. The mortgage term (how many years are you borrowing the money for?).Your deposit value (how much you have saved).Property value (how much does it cost?).Mortgage type: Repayment or Interest only?.Our Mortgage repayment calculator can help. If you’re looking to buy a property, it's a good idea to work out what your mortgage payments are likely to be, to ensure you could meet them without being overstretched.
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