Repayment or overpayment on Interest Only

marc-h_2

If you have a repayment mortgage that costs £1000 a month is that any different to paying £1000 a month on an identical interest only mortgage? So that would include say £400 interest payment a month and £600 overpayment? Does one cost more over the term of the mortgage? The mortgages are identical in every way except one is interest only and one is repayment. There are no penalties associated with either for paying it off or overpaying.

Thrugelmir

If you pay the precisely same amount in total every month on an interest only mortgage then you've a repayment mortgage.

marc-h_2

I was told different by a mortgage "advisor" at lloyds that many times that I started to question myself. She kept saying that with interest only mortgage your overpayments come of the balance whereas with a repayment mortgage it comes off what you owe! Whatever that is supposed to mean, she could never quite explain.

Thrugelmir

marc-h wrote: »

Whatever that is supposed to mean, she could never quite explain.

The same thing but in different words.

Do you want the discipline and certainty of repaying the debt by the end of the term?