Direct Repayment Mortgage

  • The means of re-paying a mortgage loan (see also interest only repayment)
  • Say you buy a house for £100k.
  • Say you borrow £75k
  • You thus provide £25k deposit.
  • 75% LTV = 75% of debt you owe to the lender and
  • 25% of the deposit is the amount you provide to buy a property.
  • In this instance you repay the mortgage by direct repayment.
  • This means the mortgage loan decreases inversely proportional to any equity increase  (amortization).
  • This continues throughout the term until the mortgage is repaid to the lender and you own all the equity.
  • This is in contrast to an interest only mortgage
    • The loan remains the same and
    • You repay using an alternative means e.g.
      • You sell and downsize, and
      • Rely on any inflationary property increase in value to repay the loan.

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