What type of remortgage loan to choose?
You could opt for an Interest Only remortgage
The interest on the loan is repaid each month. This is a mortgage product popular with landlords but can also be a good idea if you are struggling with repayments but may sell your property at the end of the mortgage term allowing you to sell it and with the increase in equity, pay back the lender the original amount and have money left over to buy a smaller property. Many lenders will expect you to make payments into an investment plan eg and endowment, pension or ISA (individual savings plan).
You might consider a Repayment option
This is the most traditional type of home loan. You make monthly payments part of which go towards repaying the money you have borrowed and part of which pays the interest on the loan. This method guarantees that you will have paid off all of the loan when the term of the mortgage is up. The amount of interest charged on these loans tends to be slightly higher than for interest only loans.
You could look at taking out an Endowment mortgage
Not perhaps the loan with the most favourable publicity. It works by the home owner paying interest on the loan to the lender and premiums into an investment plan. The plans are normaly run by insurance companies and will include life cover. If the fund into which your money is paid performs badly, as is the case with many at the moment, then your plan will not cover the cost of the shorfall at the end of the mortgage term.
