What is a 'Capital and Repayment' mortgage?
A "Capital and Repayment" mortgage enables the borrower to repay the whole borrowed sum over the term of the loan.
The monthly repayments include an element which repays the borrowed capital, as well as a payment for the monthly interest of the loan.
IVAs And Mortgages
A Capital and Repayment mortgage loan cannot be included in an IVA because it is a secured debt.
A Capital and Repayment mortgage is different to an 'Interest Only' mortgage, which is a secured loan where monthly payments are made up of interest payments only. An Interest Only mortgage loan cannot be included in an IVA either.
Lengths of repayment term
A capital and repayment mortgage schedules the repayments to run for a set term. The schedule of payments ensures that when the final payments are made the full mortgage will have been repaid.
The speed with which a mortgage like this get repaid is dictated by the size of the payments towards the repayment of the capital. The higher the repayments towards the capital, the quicker the loan is repaid.
Capital and repayment mortgages tend to be more expensive that other types of mortgage, due to the extra money needed to repay the capital.
When financial problems are being experienced, changing from a capital and repayment mortgage to an 'interest only' mortgage can generate much needed funds.
This can be most useful if you are trying to improve your disposable income. Rather than repaying your mortgage, the extra funds just might help you afford an IVA.