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What is a repayment mortgage

What is a repayment mortgage

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Getting a mortgage can be a time consuming and difficult task, especially if you’re a first time buyer tying to get on the ladder. There are different types of mortgages, each with their own advantages and disadvantages that you need to be aware of.

As it’s one of the most important decisions you’ll ever have to make, it’s absolutely vital that you don’t rush into anything. One of the first things to consider is whether you want an interest only or a repayment mortgage.

Understanding the repayment mortgage

Sometimes referred to as a capital and interest mortgage, the repayment mortgage requires you to pay off the full loan, plus any additional interest and charges over a fixed period.

Payments are made monthly and within the first few years your money mainly pays only the interest. However, as time goes on, you start to pay more towards the capital. The main advantage of this type of mortgage is the fact that the entire mortgage will be repaid at the end of the agreed term.

Repayment mortgages tend to be the safest option, as with an interest only mortgage you are
responsible for saving the additional money you’ll need to pay off at the end of the term. If you don’t, you could end up in financial difficulty at the end of the mortgage.


You will actually be paying less in the long term for a repayment mortgage than you would with the interest only option. In the short term, interest only mortgages have a lower monthly charge, but as you’re touching the capital, the interest remains the same. With repayment mortgages you’ll be paying off the entire mortgage little by little; decreasing the total amount you have to pay overall.

The fact that it’s safer is also a major advantage in this uncertain economic climate. The only time this type of mortgage would be a bad idea is if you plan on moving within the first few years of buying the house. As you will only be paying the interest at the beginning of the mortgage term, you will still owe a considerable amount of money.

How much can you afford?

What is a repayment mortgageIn order to decide whether or not a repayment mortgage is for you, you’ll need to look at how much you can afford. Take a look at our online calculator to help you calculate how much you can pay out each month.

All you need to do is type in how much you want to borrow, the interest rate and how long you want to pay it off for. The calculator will then tell you exactly what the monthly repayments would be. Think about how this figure will fit into your budget; will it leave you with enough income to cover your other expenses?

The exact cost of your mortgage will be determined based upon your personal circumstances, so it’s important that you consider consider the totals given by online calculators ss a rough guide to help you plan your finances.



About Jemma Porter

About Jemma Porter

Jemma Porter is an experienced content creator who has written for a number of online publications. A self-confessed penny pincher; she's often found seeking out the best personal finance deals.

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