Getting a Fair Deal On a Mortgage

4. How should I repay it?

  • Why are you trying to sell me an endowment policy (or a pension or an ISA)?
    • why is it best for my circumstances?
    • what commission are you being paid?
    • what will I have to pay in total each month?
  • What would be my monthly payments for a repayment mortgage?

You can go for a straightforward repayment loan in which you pay off part of the debt as well as interest each month so the amount of your debt gets smaller. Or an interest only loan in which you pay the interest each month to the lender and contribute to an endowment, ISA, or personal pension. These produce a lump sum which is then used to repay the capital, but there is always a risk that it may not be sufficient and you are left owing the balance. It can be the case that lenders present an outdated picture of endowment policies.

You can also get mortgages that are a mixture of the two repayment methods. If you’ve already got an endowment plan, ISA, or personal pension, you may want to use these to help repay any new mortgage. This may be a better option than cashing in the plan and buying a new one.

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