What is a repayment mortgage?

With a repayment mortgage you repay the amount borrowed (the capital) plus the interest over the mortgage term. Each month you pay interest and some of the capital off.

How do they work?

The repayment of your mortgage is calculated over the term you have chosen (ie 25 years).

The lender works out how much interest and how much capital you need to pay to keep on track. In the beginning you won’t be paying much capital off but after a few years this changes so that more of the monthly payment going towards paying back the debt.

This is combined into one monthly payment by your lender.

So as each year of the mortgage term passes your outstanding mortgage amount gradually reduces.

READ MORE ABOUT REPAYMENT MORTGAGES

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