Repayment

Within this type of loan, monthly payments to the lender comprise both interest and capital payments. In the early years of the mortgage, monthly payments mostly work to cover the interest, with only a small proportion being used to reduce the balance of the loan. Over time, the balance gradually shifts to primarily capital payments, and as such, the mortgage balance tends to reduce more quickly in the later years.

The main attraction of repayment mortgages centers upon the fact that, provided monthly repayments are maintained, it is guaranteed that the mortgage will be repaid at the end of the term. Therefore, this type of mortgage tends to appeal to those borrowers who value the certainty of repayment that they provide.

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Mortgages Warning:
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured upon it.