UK Mortgages Guide

Advantages

Disadvantages

• Simplicity
• Lowest risk
• Lowest total interest repayment
• Most flexible

• No chance of a lump sum
• No built-in life cover
• If you move, you may have to take out a new loan, with a new repayment term

Advantages

Disadvantages

• Possibility of lump sum if investment vehicle overperforms
• Lower monthly mortgage payments
• Take care of several financial needs in one payment
• Repayment vehicle is unaffected if you move home

• Higher risk - no guarantee you will be able to repay the loan
• Total interest bill over the life of the loan is higher
• Exposing yourself to potentially complex financial products
• Less flexible terms than repayment mortgages

Advantages

Disadvantages

• Tax free cash surplus if policy overperforms
• Built in life cover
• Attractive when base rates are low
• Fully portable when you move
• Various types of policy to suit different attitudes to risk

• Potential for shortfall if policy underperforms
• Forced to take life cover
• Unattractive when rates are high
• Expensive to cash in early
• Can't extend the term - must increase payments if you borrow more
• High fees and charges are hidden in the policy payments

Advantages

Disadvantages

• Tax relief on contributions
• Underlying fund gets tax breaks
• Tax relief on pension-related life assurance
• Option to contribute more than your monthly payments
• Potential for tax free lump sum over and above your mortgage debt

• Not everyone qualifies for a personal pension
• Limits on contributions
• Need to accumulate four times your mortgage debt
• Cannot take the benefits until retirement - long time to pay interest on the loan
• Can be complicated to understand

Advantages

Disadvantages