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Repayment of Capital

There are many ways of repayining the capital you borrow.

You can pay may choose to slowly reduce the amount you owe by repaying a proportion of it back each month - known as a repayment mortgage. Alternatively, you may want to set the money aside in an investment contract such as an ISA, which can be used to repay the capital at the end of the term.

The amount you have to save for a deposit, or the rate at which you repay the debt, depends on the term of your mortgage and, if you are using an investment contract, the growth rates actually achieved.

The repayment route is often the safest as you can be sure that the whole mortgage will be paid off at the end of the agreed term - providing all payments have been made in full and on time.

Alternatively, with the interest only route, 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 normally 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.

Your home may be repossessed if you do not keep up repayments on your mortgage.