Capital and Interest Mortgage (Repayment Mortgage)
At Austin Friars Financial, we offer capital and interest repayment mortgages, also known as repayment mortgages, to our clients. With this type of mortgage, borrowers make regular monthly payments covering both the interest charged by the lender and a portion of the original loan amount (capital). This systematic approach ensures that borrowers gradually reduce the outstanding mortgage balance over time.
One of the key benefits of a capital and interest repayment mortgage is that it results in full homeownership by the end of the mortgage term. As clients make consistent payments, they steadily build equity in their property.
Moreover, our mortgage agreements may allow borrowers to make overpayments on their mortgage. Overpayments involve additional payments on top of the regular monthly repayments. By making overpayments, borrowers can potentially reduce their outstanding mortgage balance faster and save on interest costs throughout the mortgage's duration.
It's important to note that the interest rate rest period is typically set daily, although it can vary, with the lender calculating the interest based on the remaining mortgage balance during that period.
At Austin Friars Financial, we understand the significance of overpayments in optimizing a mortgage. However, we also advise our clients to be mindful of any Early Repayment Charges (ERCs) that may apply. Some mortgage deals may impose ERCs during the initial fixed or discounted rate period, which means borrowers could incur a penalty if they overpay beyond specific limits.
Our experienced mortgage advisors are here to guide our clients through their mortgage journey, helping them understand their options and navigate potential overpayment strategies. By providing tailored advice, we empower our clients to make well-informed decisions that align with their long-term financial goals and ensure they get the most out of their mortgage.