Repayment Mortgages UK

This is widely accepted as the most straightforward of the mortgage options. A single payment is made to your lender each month covering both the interest charged on the loan as well as the repayment of the outstanding capital. Providing you maintain the payments for the entire term of the mortgage you are guaranteed to repay the loan at the end of your selected period of borrowing.

The only option with a 100% guarantee that the loan will be repaid in full at the end of the term.

In the first few years of the loan the largest proportion of your regular monthly payment goes to pay off interest – the balance outstanding is hardly reduced at all. Life cover is recommended to repay the mortgage if you die especially if you have any dependents.

Every month, the payments made to the lender go towards reducing the amount you owe as well as paying the interest they charge. So each month you're paying off a small part of your mortgage.

The pros:

It's a simple, clear method – you can see your loan getting smaller.

The cons:

Initially your payments will be mainly interest, so if you want to repay the mortgage or move house in the early years, you'll find that the amount you owe won't have gone down by very much at all.