Interest

Mortgage Brokers

What is a Repayment Mortgage? A repayment mortgage, also referred to as a capital repayment mortgage, is a mortgage arrangement where your monthly repayments, for an agreed amount of time (term), are split into two parts: one part pays for the interest owed on the initial loan, and the second part pays the rest of the loan.

This is why most mortgage lenders now only offer residential interest-only mortgages to high-income people and buyers with large deposits (usually 50% or more of the property value).

Remortgages

The amount you need to pay every month is calculated so that you pay off the total amount owed before the end of the mortgage term.

Mortgage

Pros of Interest-only mortgages. You get lower monthly payments since you will only be paying back the interest on the loan.

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Lenders

How Interest-only mortgages work. Since the monthly repayments only cover the amount of interest owed, which can be a few hundred pounds cheaper than a repayment mortgage.

Repayment Mortgage Works

While paying off the mortgage, you might be eligible for lower interest rates.

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Which Type of Mortgage is More Suitable for You? Well, a repayment mortgage is generally a better and cost-effective way of borrowing the money you need to buy a home.