Repayment mortgage

 

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Repayment mortgage

Each month you will make a repayment to the mortgage lender. Part of this payment will go towards reducing the total amount of capital you owe and part of it will be an interest charge on the remaining balance of the mortgage. Unless interest rates change or your introductory offer period ends, you pay the same amount each month. When one of these things does happen, repayments are altered so that the loan is still repaid at the end of the specified term.

Repayment mortgage

A mortgage where throughout the term, regular payments (usually monthly) are made to partly repay interest on the capital and to partly repay the capital itself (the amount of the loan).Initially the largest proportion of the repayments will be used to pay interest since the capital amount outstanding is at its highest value. Therefore over the initial years the capital will not reduce very much. However as the years proceed more and more of the monthly repayments will be applied to reducing the capital until towards the end of the term the large proportion will be paying off capital and a small proportion paying interest.In the event that interest rates rise then often the monthly repayments will rise accordingly. Alternatively, to keep the same monthly repayments the term will need to be extended. If interest rates fall then the reverse applies. It is usually a requirement of the lender (that is, a building society or bank) providing the mortgage that the borrower takes out life assurance so that repayment is made in the event of his/her death during the term.



Similar Matches

Early repayment period

Early repayment period

A period of time that applies to certain types of loan during which a charge will be made if the loan is repaid in full or in part or its terms are varied at the borrower's request.


Prepayment penalty

Prepayment penalty

Lenders can impose a penalty on a borrower who pays a loan off before its expected end date.


Prepayment speed

Prepayment speed

Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities.


Repayment plan

Repayment plan

When a borrower falls behind in mortgage payments, many lenders will negotiate a repayment plan rather than go to court.


Repayment period

Repayment period

The period over which the borrower must repay the lender. 


Further Suggestions

FHA prepayment experience
prepayment fee
Monthly repayment
Repayment term
Prepayments
Repayment vehicle
Zero prepayment assumption
Prepayment penalty
Lag response of prepayments


 
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