Repayment of Capital
There are many ways to actually repay the capital you borrow.
You can pay some of it back each month, slowly reducing the amount you owe (a repayment mortgage), or set the money aside in an investment contract such as an ISA or Endowment.
The amount you have to save, or the rate at which you repay the debt, depends on the term of the mortgage and, (where you are using an investment contract) the growth rates actually achieved.
The repayment route is the safest as you can be sure that the mortgage will be paid off at the end of the term if all mortgage payments are met.
Alternatively, an investment contract may be used to generate a fund with the aim of paying off the mortgage and generating a surplus. However if growth is lower than expected there may be a shortfall. The investment route cannot offer a guarantee of debt clearance, as the value of the investment can go down as well as up and you may not get back the full amount invested.
We have created a range of useful calculators to help you explore the options open to you.
Try out our Calculators