Capital and Interest
Capital and Interest Mortgages
Capital and Interest
Capital and Interest mortgages, sometimes known as Repayment mortgages, are the most popular choice for today's borrowers. This is the simplest type of mortgage.
The payments you make to the lender every month pay off both the capital and the interest from the loan. Over time the amount of money you actually owe will decrease. In the early years your repayments will be mainly interest and therefore the capital outstanding will reduce slowly. Provided you keep up the payments, you are guaranteed to pay off the loan by the end of the agreed term. This is usually 25 years, however terms can be longer or shorter depending on your circumstances.
The lender calculates your monthly repayments depending on the amount borrowed, how long you wish to repay this over, the interest rate and how the rate you have chosen is set.
A repayment mortgage is simple, straightforward and easy to understand.
Your home may be repossessed if you do not keep up repayments on your mortgage