Capital And Interest Mortgage

A type of mortgage where monthly repayments include capital repayments and interest, so that at the end of the mortgage term, your mortgage will be repaid in full.

A Capital and Interest Mortgage is one of the most usual types of mortgage. The monthly repayment made by the borrower includes a repayment of capital borrowed and an amount for the interest charged.

At the beginning of the mortgage most of the payment is used to cover the interest and only a small amount is paid towards reducing the mortgage. Over the term of the mortgage more and more of the monthly payment is comprised of paying back the capital borrowed.

As the debt gradually reduces the element of capital increases and the interest element reduces, so although the monthly repayment stays the same (assuming interest rate remain unaltered) the debt starts to reduce more quickly as the term of the mortgage progresses.

On a 25 year term mortgage it would not be unusual to still owe over 50% of the original debt after the first 15 years.

Providing the correct monthly repayments are made on their due dates this mortgage will guarantee to repay the total mortgage debt at the end of the mortgage term. As long as the monthly payments of repayments are always made on time the mortgage is guaranteed to be paid off at the end of the term.

Other terms for a Capital and Interest Mortgage include Repayment Mortgage, Amortised Mortgage, Traditional Mortgage, and Annuity Mortgage.

Jargon Buster

Use the links below and the resulting list of terms on the right to locate the term you are looking for. If you can't locate it, please get in touch.

A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z
keyboard_arrow_left

keyboard_arrow_right

We have loads of great customer reviews