Mortgage repayment methods

Capital & Interest Repayment
A repayment mortgage guarantees your loan is paid off in full at the end of the agreed term.

With a capital & interest 'repayment' mortgage each monthly payment contain an element of capital and interest on the loan - providing you make all your monthly repayments, you are guaranteed to pay the mortgage off at the end of the term.

Interest Only
With an 'interest-only' mortgage you only pay-off the interest on the loan and none of the outstanding debt until the end of the term.

Monthly payments are usually made up of three parts:

• Interest on the capital you owe the lender
• Life insurance
• Contribution to an investment plan designed
to pay off the outstanding capital at the end
of the mortgage term

Interest-only mortgages usually have lower monthly payments than a repayment mortgage but are inherently more risky.

There is no guarantee that the investment plan you choose will generate sufficient capital to pay off the outstanding debt at the end of the mortgage term, although, should your investment be more than successful, you may be able to pay off your debt and have a lump sum left over, or even clear the debt in advance of the expected date.


Once popular, 'interest only' mortgages are now viewed as 'too' risky by most lenders and only considered for 'Buy to Let' mortgages.

For 'home' mortgages, the lenders may consider if the potential 'investment vehicle' is long standing and pretty much cast iron guaranteed to provide enough to repay your mortgage.

Repayment mortgages are recommended to most homebuyers as they involve almost no risk. It’s true that the monthly mortgage payments will be larger, but the point is: "if you can’t afford them now, how would you pay off an entire mortgage at a later date?".

If you are unsure which type of mortgage would suit you best, contact us and a mortgage expert from our team can advise you on the best way forward.

Call us for free using your inclusive minutes on 0333 12 12 101

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. THERE MAY BE A FEE
FOR MORTGAGE ADVICE, THE PRECISE AMOUNT WILL DEPEND ON YOUR CIRCUMSTANCES, OUR TYPICAL FEE IS £295

Mortgage & More is registered in the UK: 06437752 ~ Authorised and regulated by the Financial Conduct Authority FRN: 651274 ~ 9 Balas Drive, Sittingbourne, Kent ME10 5AS - 01634 235132