Mortgages can sometimes be tricky to understand. With so many variables to the equations sometimes we donít know how much a month we would need to pay back. Firstly there are two types of mortgages; repayment and interest only.
A repayment mortgage is very simple, every month you pay back a certain amount of the money borrowed along with the interest. The repayment is based on the LTV, interest rate and the loan term. The theory stands the shorter the term, the less interest you will be paying on it, and vice a versa.
interest only mortgages
An interest only mortgage is slightly different and generally seen as the unconventional way for a mortgage. It is the mortgage with less fixed payment every month, so subsequently the cheaper out of the two. It works by the borrower paying back only the interest for the loan and this depends on the term of mortgage. After the term is complete the original loan amount would be due.
repayment calculator graph
So with many variables to take into account, what a mortgage repayment calculator graph does is shows a summary of what your repayment may be.
The above mortgage repayment calculator graph shows how a repayment mortgage would work. Taking an estimated 8.5% interest rate, you can see that £600,000 is the total amount payable by the borrower on a £250,000 loan. With the term time decreasing, the payable with interest also decreases. The difference between the blue dots and the red dots shows the interest.