Repayment Mortgages are also referred to as Capital Mortgages or Capital Repayment mortgages.
Repayment Morgages are the traditional mortgage type and is currently the only mortgage type that at the end of the loan period (provided you have met all of the agreed repayments), that will guaranteed that you own the property outright, with no further payments required.
For example, if you borrowed £100,000 at a fixed interest rate of 5%, over a mortgage term of 25 years, each month you would pay £591.27. At the end of the mortgage term you would own the property outright.
The amount of your borrowings (mortgage) is split into two segments, (capital) repayments and interest payments, capital repayment are the payment of the amount of your borrowings and the interest repayments are payments of the interest on the outstanding borrowings.
As you meet each repayment of your mortgage, you are paying off part of the capital and part of the interest until the full amount is repaid.
In the early period of your mortgage you pay off mostly interest and then slowly as the amount of capital owed reduces, you pay less interest and therefore pay off more and more capital. Capital repayment mortages are always higher repayments than an interest only mortgage, this is because at the end of your mortgage term you will own your property 100% outright.
