What is a Repayment Mortgage?Written by John Mussi
A repayment mortgage is type of mortgage that most people think about. The idea behind a repayment mortgage is that you pay monthly for a set period and each payment consists of an element of capital and interest. A repayment mortgage is one for which each monthly payment contributes to capital and interest that is to be repaid over term of mortgage. Assuming that contractual payment is made each month for full term of mortgage, at end of term mortgage will be fully repaid. With a repayment mortgage your monthly payments consist of both capital amount borrowed together with accrued interest. Your lender will keep you advised about how much you have repaid. Initially, most of your monthly payment pays off interest and what's left goes towards reducing what you've actually borrowed. As time goes on, ‘balance' changes and as interest charges reduce, more and more of your monthly repayment is used to reduce loan. A repayment mortgage is a mortgage contract under which customer is obliged to make payments of interest and capital which are designed to repay mortgage over stated term. As long as you keep up payments, whole loan will be paid off over term of loan. Many people opt for a repayment mortgage on for this very reason - a repayment mortgage is safest option as it means that you will have that guarantee.
| | Your Portfolio and “Old Ironsides”Written by Kemberly Wardlaw
The USS Constitution first ventured into waters in 1798. From there she became an icon of durability and success. In battle, ship became known as “Old Ironsides” because shots fired from enemy ships seemed to bounce off her hull. She may be best remembered for her service in War of 1812. Today, loyal ship may be found resting quietly in Boston Harbor. During week of Fourth of July, at Boston Harborfest, “Old Ironsides” makes her annual voyage down harbor. This is termed “Turn-Around” cruise. As investors, we can learn a lot from this old ship and its history. The first is longevity. It is easy to be influenced by short-term direction of market. A long-term perspective, if warranted, is best observed. Of course if you have a short-term goal, aggressive investments such as individual stocks may not be best alternative. However, if you have many years before retirement, you should ignore short-term volatility. As with “Old Ironsides,” she fought many a battle, but more than two hundred years later remains afloat and above water.
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