Repayment Mortgage

The most common type of repayment method is a repayment mortgage (also known as capital and interest).  With this type, you are required to make a payment each month that is made of interest charged plus some money to go towards the outstanding capital. This means that there will be no lump sum at the end of your mortgage term.

Interest-only Mortgage

Unlike repayment mortgages, interest-only mortgages require you to pay the interest and not the capital. This means that the agreement is that you pay just the monthly interest on your mortgage amount – resulting in lower monthly payments but after the term agreed you will need to pay the lump sum of capital borrowed.

With these two types of repayment, choosing the right one will depend on your requirements and how much you can afford. Everyone is different and so is their mortgage.

If you are unsure as to which mortgage is right for you, why not try our What Mortgage? calculator to help you decide based on your own personal circumstances.

Below we’ve put together a list of the most frequently asked questions about repayment and interest-only rate mortgages. If you would like any additional information or to ask your own question, let us know.

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