Mortgages

What types of repayment are there?

There are two main methods of paying your mortgage - repayment and interest only. You can choose from either one of these methods or a combination of the two.

• Repayment mortgage: Your payments pay back both the interest and capital part of your loan at the same time. This reduces the balance of your mortgage each month, and payments are calculated so that by the end of your mortgage term the mortgage will be repaid in full.
• Interest only mortgage: Your payments only cover the interest on your loan. The size of your loan remains constant and you must arrange some means to repay the loan at the end of the term. For instance, if you take out a mortgage for £100,000, your monthly subscription will cover just the interest being charged - the £100,000 will still be outstanding at the end of the term, and you must find a suitable way of paying this back.