Payments are usually made on a monthly basis but payment on a bi-weekly or weekly basis can be advantageous. While repayment include both interest and capital, very little capital is repaid during the early stages of the mortage. Interest payments are calculated based on the assumption that capital is repaid over the term of the mortgage. Early capital repayment through additional voluntary payments can significantly affect the cost of a mortage as the interest is calculated on less capital. By making extra regular payments, the term of the loan can be dramatically reduced.
Lenders always insist that the cost of reinstating the property be insured for security purposes.
Furthermore the lender is likely to insist on a reducing life assurance policy been taken out to cover the risk that the borrower may die within the mortgage repayment period. This is probably in your best interests as well as it protects the interests of your family. The Endowment mortgage Endowment mortgages do not repay capital during the mortgage term. Instead, repayments pay the interest cost of the loan and the remainder is invested in a with-profits life policy. The theory is that a tax free capital sum is built up over the term of the mortgage and used to repay the capital.