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Interest or Repayment Mortgages

First of all, you need to decide how you want your mortgage repaid.

Do you want to reduce the value of the mortgage as you go along? In which case you should opt for a 'repayment' mortgage.

Or do you want to merely pay the interest off as you go along without paying off the capital element of the mortgage until the end? This is called an 'interest only' mortgage and the monthly payments are obviously a lot cheaper than those associated with a 'repayment' mortgage but don't forget, you will need to pay into another investment vehicle in order to accumulate the amount required to pay off the capital element at the end of the mortgage. Most people address this requirement using an endowment policy.

Wherever possible, you should really consider a 'repayment' mortgage and pay off your debt as you go along rather than rely on another investment to produce the required sum at the required time.