Frequently asked questions
With a capital repayment mortgage, you’ll make monthly repayments for an agreed period of time (also known as the ‘term’) until you’ve paid back the initial sum you borrowed. These monthly repayments also cover the interest charged on the loan.
This means that the amount you owe will decrease every month. And, as long as you keep up the repayments, your mortgage will be fully paid off at the end of the term. Having a fully paid off mortgage means you’ll own the property unencumbered.
With an interest-only mortgage, your monthly payments only cover the interest charged on your loan. This means that your payments will be less than on a repayment mortgage. But at the end of the term, you’ll still owe the original amount you borrowed from the lender.
To fully own your property by the end of the mortgage term, you will need to repay the whole balance. You will need to ensure that you have a plan to repay the loan at the end of the term, when the balance is due.
If you’re looking to lower your monthly repayments, one option to consider is extending the term of your mortgage. This means you’ll pay less each month, but over a longer period of time. However, you'll likely pay more overall by doing this.
Another way to reduce your mortgage payments is to switch to a better deal. Remortgaging may allow you to reduce the size of your loan and potentially secure a better interest rate.
You can remortgage at any time. However, if you’re on a fixed-rate mortgage, you may be faced with an early repayment charge if you choose to remortgage before your fixed-rate period ends.
If this is the case, it may still be cost-effective to pay an early repayment charge to secure a lower rate sooner, but this will depend on your individual circumstances.
