Your monthly instalments will cover interest and contributions to an investment or savings plan such as an Endowment (combining Investments with Life Insurance cover), an Individual Savings Account (ISA) or a Personal Pension Plan. The aim of the plan will be to grow the funds sufficiently to repay the mortgage at the end of the period and possibly give you a surplus.
Plus Points: You have the opportunity to invest in tax efficient savings plans and to benefit from a rising stock market. Sometimes, the plans include life cover such as with Endowment Mortgages.
Points to Watch: Stock markets can rise or fall and your savings plan may not grow sufficiently to cover the repayment of the mortgage. You will need to monitor this carefully and increase your savings early if required.
Three standard Interest Rate Options for Repayment Mortgages:
