Understanding Repayment Mortgages
For the majority of residential mortgage applications, a repayment mortgage is the most ideal option. At Dwello, we believe in keeping things simple: with a repayment mortgage, you're paying both the interest and the capital each month, so by the end of your mortgage term, your property is fully yours with nothing left to pay.
It's the most straightforward route to homeownership, and for most people, it's exactly what they need.
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Pros and Cons
The advantages are compelling:
Guaranteed ownership.
At the end of your mortgage term, the property is yours with no outstanding debt. No complicated exit strategies needed.
Building equity.
Every payment increases your stake in the property, providing financial security and potential for future borrowing if needed.
Peace of mind.
You don't need to worry about having a lump sum available at the end of the term. The mortgage naturally pays itself off.
The main downside?
Higher monthly payments.
Higher monthly payments.
Because you're paying off the loan as well as the interest, your monthly payments will be higher than an equivalent interest-only mortgage.
For most people, this trade-off is worth it for the security and simplicity that repayment mortgages provide.
For most people, this trade-off is worth it for the security and simplicity that repayment mortgages provide.
The main downside?
Higher monthly payments.
Higher monthly payments.
Because you're paying off the loan as well as the interest, your monthly payments will be higher than an equivalent interest-only mortgage.
For most people, this trade-off is worth it for the security and simplicity that repayment mortgages provide.
For most people, this trade-off is worth it for the security and simplicity that repayment mortgages provide.
Repayment vs Interest-Only Comparison
The choice often comes down to your priorities and circumstances:
Repayment
Choose repayment mortgages if:
You want the security of knowing your mortgage will be paid off
You don't want the complexity of planning a repayment strategy
You're buying your main residence (this covers the majority of residential applications)
You're buying your main residence (this covers the majority of residential applications)
Interest-only
Interest-only might suit if:
You need lower monthly payments and have a solid repayment plan
You're an experienced investor with multiple properties
You're buying investment property where cash flow is crucial
You're buying investment property where cash flow is crucial
For residential purchases, we rarely see clients requesting interest-only mortgages nowadays. They were much more prevalent 15-20 years ago, but today's consumers overwhelmingly opt for the repayment method.
The information contained in this article does not constitute financial or mortgage advice from Dwello Mortgages. It is provided for general informational and educational purposes only. No information contained constitutes a solicitation, recommendation, endorsement or offer by Dwello.
Dwello is not making any representations or warranties, and assumes no liability, for the content provided in this article, including any third party information. Consumers should always consult their own financial advisors before making any mortgage or remortgage decisions based on this type of general market commentary and analysis.
All mortgage pricing, rate scenarios and cost comparisons used are hypothetical examples. Actual rates, fees and mortgage costs may vary based on the specific lender and the individual borrower's personal financial circumstances.
Dwello Mortgages, a trading style of Dwello Mortgages Limited is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Dwello Mortgages Limited is registered in England and Wales with company number 14432864. Registered Office: St James House, Hollinswood Road, Telford TF2 9TW
Dwello is not making any representations or warranties, and assumes no liability, for the content provided in this article, including any third party information. Consumers should always consult their own financial advisors before making any mortgage or remortgage decisions based on this type of general market commentary and analysis.
All mortgage pricing, rate scenarios and cost comparisons used are hypothetical examples. Actual rates, fees and mortgage costs may vary based on the specific lender and the individual borrower's personal financial circumstances.
Dwello Mortgages, a trading style of Dwello Mortgages Limited is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Dwello Mortgages Limited is registered in England and Wales with company number 14432864. Registered Office: St James House, Hollinswood Road, Telford TF2 9TW
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Dwello Mortgages Limited, St James House, Hollinswood Rd, Telford TF2 9TW
