Capital And Interest Mortgage

What is a Capital and Interest Mortgage?

A Capital and Interest Mortgage is a type of mortgage where monthly repayments are made up of capital repayments and interest. In short, Capital refers to the amount you are borrowing and Interest is the amount of interest applied on top of that. They are among the most popular type of mortgage in the industry.

It is sometimes referred to as a Repayment, Amortised, Traditional or Annuity Mortgage.

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.


Q: How does it affect my Credit Report?

A: 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.

Q: How does it appear on my Credit Report?

A: In most cases, mortgages in your name should appear on your checkmyfile Credit Report, along with the name of the lender, the balance, which Credit Reference Agencies are reporting the payments and payment markers going back six years.

To see how lenders see your mortgage payment history, you can try checkmyfile FREE for 30 days , then for just £14.99 a month after, which you can cancel online at any time.

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