You can fund your property purchase in many ways. This section is a brief guide to funding your purchase through a mortgage. A mortgage is a loan given against the security of the property. Interest is payable until the loan is repaid. Mortgages can be interest only or repayment. • An interest only mortgage relies on a repayment from an ISA, endowment or pension; interest is paid on the full amount of the loan until repayment. • With a repayment mortgage, the monthly payments are part interest, part repayment of capital. Mortgage providers normally insist on some form of life insurance to cover the repayment in the event of the death of the borrower (or one of the borrowers in the case of a joint mortgage). This is called term assurance for interest- only mortgages and decreasing term assurance for repayment mortgages. Borrowers have the option of a fixed interest rate for a period as well as the traditional standard variable rate (SVR) of interest. The fixed rate protects the borrower during the fixed rate period against rises in interest rates, though, if interest rates fall, the borrower does not benefit from lower rates. There are also discount rates and capped rates. See our section on Example Costs to find out what each method might cost for a particular loan. Bank and building society accounts offer a secure way of saving and allow you to earn interest on monies which are available on demand or at short notice. You earn higher rates of interest from larger deposits or when you commit funds for a fixed period. The capital sum is fixed - if you take the interest as income and spend it, the purchasing power of the remaining capital falls as inflation puts prices up. Endowment Policies pay out a cash sum on a specified date or on prior death. You pay level premiums throughout. The final maturity value depends on the performance of the underlying unit-linked or with-profit funds. Policyholders may decide to stop payments prior to the maturity value and cash in the policy for a reduced sum. The policy may be sold or the policy can remain in force and pay out a reduced sum on maturity. If the policy was originally for a term of ten years or more and premiums have been paid for more than 7.5 years, then the proceeds of the policy are tax free for the policyholder. Policies taken out before March 13th 1984 still qualify for tax relief on the premiums. Previously endowments were used to repay the capital on interest-only mortgages. This is now less common because of the greater tax benefits of using ISAs or pensions for this purpose. With an endowment the life office may include Low Start, critical illness and waiver of premium which gives you greater protection and flexibility. A repayment mortgage is designed to pay off your mortgage at the end of a specified period. Your payments cover interest and capital repayments on your loan - there is no investment or life cover built in. The Decreasing Life Assurance is usually arranged separately. This life cover decreases over the years in line with your mortgage and pays the outstanding balance if you (or, with joint life cover, your partner) die before the term of the mortgage. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. The Financial Services Authority does not regulate all forms of Mortgages and loans. Written Quotations are available on request. Loans subject to status. BFS Limited, Independent Financial Advisors, BFS House, The Green, Horsmonden, Kent TN12 8JS Consumer Credit Licence 503927 Berriman Financial Services are authorised and regulated by the Financial Services Authority