Repayment Mortgages

A repayment mortgage is any one in which the monthly payments cover not only the interest charges, but also pay off some of the outstanding debt. This is a general type, and there are many specialised mortgages that are of the repayment type, whilst offering their own unique features, for example variable, fixed, capped rate, and flexible mortgages are all examples of these.

With any form of repayment mortgage, the amount that is outstanding will fall with each monthly payment, reducing throughout the life of the mortgage until the entire amount has been fully repaid. As the interest is calculated monthly (daily in some cases, like flexible mortgages), the amount of interest being charged actually falls throughout the repayment term, and so for the same monthly repayment increasingly more of it will be going to clearing the debt.

This is by far the most common basic type of mortgage in the UK, the only other approaches being the interest only mortgage, which as the name suggests only covers the interest charges with its regular payments, and the endowment types.

There is a wide range of choice within the repayment mortgage arena, our mortgages page has a brief description of these, and each has its own in-depth page in order to help you to get a better idea of what each type can offer. A mortgage is a large commitment, and most probably the biggest debt that people will take on during their lives, so getting the right one is important, which is why it is important to do your research first.

When looking for any form of mortgage, be it repayment or otherwise, you should pay attention not only to the APR (annual percentage rate), but also to what the mortgage offers. There are many different types, and some are more suitable for certain people than others, so spending some time to understand the pros and cons of each is very worthwhile. It's also advisable to check the terms and conditions related to early repayment, as many people find that switching mortgages at some point down the line can save them money, however in some cases the lender will have penalty fees associated with early repayment, which could negate the savings of switching.

Repayment type mortgages are ideal for those who wish to gradually clear their mortgage debt over time, and who do not wish to have the extra hassle of arranging a separate financing method to repay the debt, or have the worry of weather an endowment is going to perform well enough to meet the financial obligations.