Your monthly repayments consist of repaying the capital amount borrowed together with accrued interest. On your mortgage statement, normally received annually, you will see that the amount borrowed decreases throughout the term.

ADVANTAGES

At the end of the term, you are safe in the knowledge that the total amount of the debt has been repaid. Overpayments and lump sum payments into your mortgage account can be made reducing both the interest and capital amounts repayable. Life assurance cover is not always necessary in taking out this type of mortgage.

DISADVANTAGES

There may be financial penalties for making lump sum/overpayments into your mortgage account. In the early years of a repayment mortgage the majority of the monthly repayment is interest rather than capital. For borrowers moving house regularly, this can result in little of the capital being paid off. If you have no life assurance cover in place and die before the loan is repaid, the mortgage will still need to be repaid. This may result in the property having to be sold to repay the debt owed.

Variable Rate Mortgages
Fixed Rate Mortgages
Capped Rate Mortgages
Discounted Rate Mortgages