Capital and Interest

You pay off part of the capital each month within your regular payment. With the ‘repayment’ method, your monthly payment will contain an element of repayment of your capital in each payment as well as the interest. The proportion of each changes throughout the term of the mortgage.

Repayment mortgages have certain advantages:

• The debt will reduce with each monthly payment you make, although the reduction will be gradual in the early years
• As the debt reduces, the amount of capital repaid increases, thus increasing your equity in the property
• Making payments in full as they fall due guarantees the mortgage will be repaid in full at the end of the term
• Lenders tend to be more flexible about rearranging payments and altering the term where necessary

Why not contact us for a more detailed analysis of your requirements.