Hi Angel, Hackney, Daughter in Distress, that's possibly two or three questions really, so, without getting too technical just yet, here's an outline:
Pro of extending your mortgage is having reduced monthly payments - which allows you more money to budget from each month.
Con is that the interest may cost more overall ie - if you extended mortgage 10 years - you will have 10 more years interest to pay on top of the price of your property.
A repayment mortgage would cost more as money - your monthly payment would include an amount which would be deducted from your initial property loan - the amount of the loan is reduced monthly.
Paying off a lump sum - depends on the amount of the lump sum:
Some banks/building societies allow you to pay an amount off the loan each year at no extra charge. This would of course reduce your monthly payments.
Making a large payment would probably mean re-arranging your mortgage and there would probably be a charge or penalty for this. If the amount you wanted to repay was substantial, It could be a good idea to do that - as the payments and interest over the years would be dramatically reduced.
*Do check first about any charges that might be incurred in any of these transactions.
If you have a large lump sum to invest, you could buy another property and rent it out?
It's really a matter of math. Get a pen an paper and list all the payments and charges for each option - or better still, get your mortgage advisor to do all the work for you - they usually have the details on sliding scale so can work it out easily.
Hope this helps, Jill
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