Different Mortgage Alternatives
Even though interest rates on mortgages are at all time lows, you may be wondering what types of mortgages are really still available. Beyond that, you may be looking for a mortgage calculator to help you calculate the costs of the different types of mortgages that you may be interested in. Here is a quick breakdown of the most common types of mortgages. Remember, there are many different types of combinations of these as well, but you usually have to ask your mortgage broker for more information.
Capital and Interest Mortgage
This is the most common type of mortgage available in the UK. It is very similar to the US fixed mortgage, in which you pay both principal (or capital as it’s called in the UK) and interest to the lender each month. Over time, as you make your payments, you eventually pay off the loan. You can use any standard mortgage calculator to calculate the costs of this mortgage; you just need to input the interest rate and term.
Interest Only Mortgage
An interest only mortgage is one in which you only pay off the lender’s interest on the loan each month, and don’t make any principal payments with your monthly payment. In order to pay off this loan, you will need to make a lump sum payment to pay off the mortgage at the end of the term.
Since interest only mortgages are a little different, you would want to use an interest only mortgage calculator to calculate your costs.
A remortgage is a type of mortgage used to change your current mortgage into a new mortgage, usually to lower the interest rate and payment. A remortgage can be either capital and interest or interest only, but it is most commonly a capital and interest mortgage.
Buy To Let Mortgage
A buy to let mortgage is a mortgage designed for rental properties, and usually have very different terms and restrictions compared to a traditional mortgage. For example, the money is usually loaned based on the expected income of the property, and not just the buyers financial situation.
This is a featured post on behalf of Emortgage Calculator.