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How Is Interest Calculated On a Mortgage?: Interest is charged in different ways depending on what kind of mortgage you have.
The Mortgage Glossary: APR - This stands for Annual Percentage Rate and should be used to compare the costs of credit.
What Happens If I Can’t Keep Up My Repayments?: It is very important that if you are having problems meeting your mortgage repayments, you talk to your mortgage lender straight away.
What Is A Remortgage?: ‘Remortgage’ is basically the term for switching your mortgage to another mortgage lender.
What is a Fixed Rate Mortgage?: A loan where the initial payments are based on a certain interest rate for a stated period and the rate payable will not change during that period regardless of changes in the lender's standard variable rate.

What Happens If There’s A Shortfall At The End Of My Mortgage Term?

There has been a lot of publicity lately about endowment policies that have not been sufficient to pay off the mortgage at the end of the term. As an investment vehicle for new customers, they are virtually obsolete, as with a fluctuating economy there is no guarantee that the resulting balance will cover the mortgage requirements.

In these cases the borrowers have been forced to find the outstanding balance from somewhere else at the end of the term. It is estimated that 3.5 million households are now facing shortfalls of more than £5,000 on their loans.

If you already have an endowment – the best advice is to stick with it. Existing endowments can be used to support a new mortgage with any ‘additional lending’ over the value of the projected maturity balance being covered either by a repayment mortgage or with an alternative repayment vehicle such as an ISA. It is also worth pointing out that historically the returns on endowment policies have been pretty good (provided they go full term). If you cash in an endowment after only a few years it is possible you will receive less than the amount you have invested.

If you are worried that there may be a shortfall – seek immediate advice from a suitably qualified financial adviser. To insure against this pitfall it is best to have savings as a back up just in case.

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