What is a...

Capital and Interest Mortgage

A Capital and Interest Mortgage, also known as a Repayment Mortgage, is a type of mortgage where monthly repayments are made up of both capital repayments and interest. These are the most popular type of mortgage in the industry. Capital refers to the amount borrowed, while Interest refers to the additional cost of borrowing the Capital.

How do I check my mortgage history?

Providing your mortgage lender has shared the account information with a Credit Reference Agency, you should find the account on your Credit Report. You’ll be able to see your lender’s name, the mortgage’s outstanding balance, repayment history, registered address and more.

You’ll also be able to see any previous mortgages you’ve held, if they are still be reported.

You can quickly and easily check your data held at all four Credit Reference Agencies by using checkmyfile. Our Multi Agency Credit Report collects your data from Equifax, Experian, TransUnion, and Crediva, giving you a comprehensive view of your credit on the same easy-to-use platform.

If you haven’t already, you can try checkmyfile free for 30 days, then for just £14.99 per month. Cancel online at any time.

How do Capital and Interest payments work?

At the beginning of the term most of the payment is used to cover the interest and only a small amount is paid towards reducing the mortgage. Over the course of the repayments, 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 remains unaltered) the debt starts to reduce more quickly as the term of the mortgage progresses.

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

As long as the monthly repayments are always made on time, the mortgage is guaranteed to be paid off at the end of the term.

How does a mortgage affect my Credit Report?

Provided you keep up with monthly payments, Capital and Interest Mortgages can help build your credit history because they show a stable pattern of making repayments over a sustained period of time.

It’s worth noting that any missed payments can also be recorded against you. Negative markers such as late payments, arrears, and defaults can drastically hurt your Credit Rating – especially when they occur on a mortgage account.

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