What types of mortgages are available?
In some respect they are thousands of different mortgages presently on the market, all offering something a little different, but for the most part, they are fundamentally two types of mortgages:
• Repayment and Interest, with a repayment and interest mortgage you (the loaner) will repay the mortgage plus interest within a fixed time. Most mortgages will fit into this category.
Here is an example, if you borrowed $100,000 over 25 years, you will repay the $100,000 plus the interest of $90,000 over 25 years, this is what you will repay. You will see the balance reducing over a period of time or the term of the loan.
• Interest only, with an interest only mortgage you only pay the interest on your mortgage, however when the term of your mortgage is over you are still left with the initial buying fee of your house. Using the above example this would be $100,000 still left to pay.