WHAT IS A CAPITAL & INTEREST MORTGAGE?:

This is the safest option for most as it poses the least threat in the event of a negative equity situation occuring from decreasing house prices.In the event of default on a payment a lender can ONLY RECOUP anything is has been owed.It cannot profit from the sale.Any,and if any, surplus from an increase in the market value of the property is returned to the buyer.The more equity in the property the buyer house the higher the share of profits the buyer has over the sale.This is the ideal situation many interest-only mortgage borrowers hope to profit from over the long term but nobody can predict what the trend in the housing market will be come the end of the term - only that in the long term property values do increase.This is why increasing your equity stake in the property and simultaneously decreasing your lenders financial liability over time is considered the safest option with a capital & interest mortgage.The monthly payments are higher than an interest-only mortgage because they pay for both a proportion of the interest owed and and the capital balance seperately.In there beginning of the mortgage life it is mainly the interest being payed but this gradually shifts over time to make up more of the outstanding capital owed increasing the owners equity faster & further.