Repayment Mortgage

Is this the best mortgage type for you?

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What are Repayment Mortgages?

Repayment mortgages otherwise known as Capital and Interest Mortgages, are the most popular and widely available mortgage repayment option on the market. 

This type of mortgage consists of your monthly payments including a portion of the actual mortgage (the capital), plus the added interest. With this mortgage type, you will make monthly repayments for an agreed period of time, until you have been able to pay off both the capital and interest.  

This means that your mortgage balance will get smaller and smaller every month and allow your mortgage to be repaid at the end of the mortgage term which is usually 25 years. When you first start your mortgage, the repayments will consist mainly of interest and towards the end of the term, the repayments will be mainly capital.

Pro's of a Repayment Mortgage

There are several pro’s when considering a Repayment Mortgage including:

Con's of a Repayment Mortgage

There are hardly any con’s when it comes to Repayment Mortgages, apart from carrying larger monthly payments than Interest-Only Mortgages as you are paying off both interest and capital at the same time.


The amount of capital you repay each year will depend on how the interest is calculated. This can range from between daily and annual calculations.If your interest is calculated on a daily basis, you will be repaying less interest over the mortgage term so it is best to go for this type of mortgage. 

Repayment mortgages allow flexibility when considering the amount of capital you repay as you can structure only part of your total mortgage to be on capital and interest and the balance of interest only. This will lower your monthly payments to make it more affordable. You’re also able to change the split over the mortgage term if your income increases. 

Lenders will base their decision to lend or not on the client’s ability to pass their affordability criteria. Usually clients will prefer to go for the longest mortgage term that is available.

Longer term mortgages: costs less per month as the repayments are spread over a longer term. However, the longer your mortgage term, the more you will pay overall as you will be charged more interest.

Short term mortgages: The shorter your mortgage term, the higher the cost each month, however this will allow you to pay off the balance quicker. You will own your home much sooner and end up paying less in total due to less interest.

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