Need help? Take a look at some of our most Frequently Asked Questions.
What Life Insurance will I need for a Repayment Mortgage?
Typically you will need a Decreasing Term Life Insurance policy. Decreasing term life insurance has an amount of cover which declines over time. The level of cover declines in line with the amount outstanding on your mortgage, so in the event of your death this will ensure a lump sum is paid out that is equal to what is left outstanding on your current mortgage.
It is a good idea to review your life insurance policy if you change your mortgage so that it is still in line with your current mortgage amount.
If you are buying a property with a partner then you should have a joint policy, this will ensure that the lump sum is paid out on the first of either of your deaths.
Why is Life Insurance important?
Life insurance covers your loved ones in the event of the person, who takes out the policy, passing away. If you have no life cover in place and you pass away can your loved ones afford to pay the bills and mortgage?
If not, then your home can get repossessed by the lender and sold to repay the outstanding debt on it.
This will leave your loved ones without a home and potentially less income to enable them to buy a new one.
What is a Repayment Mortgage?
A repayment mortgage is a type of mortgage that when you pay your monthly payment to the lender, the payment is made up of part mortgage loan (the amount that you borrowed) and the interest payment which is what the lender charges for the mortgage loan.
This means that each month you will own more of your house, which is called the equity.
What is an Interest Only Mortgage?
An interest only mortgage is a type of mortgage that with each monthly payment you only pay the interest that the lender has charged you for the mortgage loan.
This means at the end of the term you will have only paid the interest of the loan and will still owe the lender the purchase price of the house.
What is a Mortgage Term?
Mortgage term is what is referred to as the amount of years you will spread the mortgage loan over.
What is a Fixed Rate Mortgage?
A fixed rate mortgage is where the interest rate that the lender charges you for the mortgage loan is fixed for a certain period.
In most cases if you have a fixed rate and want to change your mortgage during this fixed rate period you will have to pay an early repayment charge (an ERC).
What is an Early Repayment Charge (ERC)?
An early repayment charge is a fee a lender will charge you if you decide to end an existing fixed rate deal with them before the end of the agreement. This is normally percentage of the outstanding mortgage.
If you can't find the answer to your question and still need help? Contact Us.
Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage. Your property may be repossessed if you do not keep up repayments on your mortgage. Typically we charge a fee of £249 for arranging a mortgage, however the actual fee will depend on your circumstances and will not exceed 1% of the mortgage amount. Red House Mortgages and Protection LTD is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered Office: 13 Fitzroy Avenue, Ramsgate, Kent, CT12 6AP. Registered company number: 10828735. Registered in England & Wales.
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