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Repayment Mortgages

Repayment Mortgages

There are generally two types of mortgage you can apply for as a potential borrower, interest only and repayment. Which option you take is dependent on your individual circumstances and what is best for you.

A repayment mortgage is probably the most conventional and widely available method of repaying a mortgage.

By choosing this type of mortgage you pay back the capital (loan) and the interest together. Your monthly payments to your lender will therefore be made up of both capital repayment and the interest on your loan.

There are many benefits to a repayment mortgage such as:

  • You will own your house outright at the end of your term – because you are paying back the loan and the interest in your monthly payments the amount you owe your lender will also reduce.
  • You pay less interest in total – the amount of interest you pay gradually decreases. You will eventually be paying less on interest and more towards the loan.
  • Keep payments low – as there is a degree of flexibility in repayment mortgages, some lenders will stretch their terms from the standard 25 years to 30. This will make a difference to your monthly payments.
  • Lower deposit requirements – lenders will generally lend up to 90/95% of the property value, but this will depend on your circumstances.

Working out how much your monthly payments will be can be helpful when making your decision. Online calculators are a great way to give you a rough idea of the repayments you can expect to make. Our online tool is a free mortgage calculator you can use to give you a rough estimate.

However, a specialist mortgage advisor can help you understand what your options are when mortgaging. They can also provide you with the most accurate calculations and secure you the best deals.

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