A repayment mortgage is the most common way to borrow money to buy a home. Each month, part of your payment clears some of what you borrowed (the capital) and part covers the interest. By the end of the mortgage term, you'll have paid off the capital in full and you'll own your home outright.
You might also see this called a capital repayment mortgage or capital and repayment mortgage - these all mean the same thing.
interest, because the amount you still owe is at its highest. As the term goes on and your balance shrinks, more of each payment goes towards capital instead.
Your interest rate can be fixed, so your payments stay the same for a set period, or variable, so they move with an external benchmark like the Bank of England base rate.
| Stage of your mortgage | What each payment mostly covers | Why |
|---|---|---|
| Early years | Interest | Your outstanding balance is at its highest, so interest makes up the biggest share of each payment. |
| Middle years | A more even mix of capital and interest | As your balance falls, less of each payment is needed for interest. |
| Final years | Capital | With a small balance left, most of your payment now clears what you originally borrowed. |
Overpaying can reduce the total interest you pay and shorten your term, because you're clearing capital faster than your original schedule requires. Most lenders let you overpay up to a set amount each year, often around 10% of your outstanding balance, without triggering an early repayment charge, but this varies by lender and deal, so it's worth checking your mortgage terms first.
Before you overpay, it's worth weighing it against other priorities, like clearing higher-interest debt first or keeping an emergency savings buffer - overpaying ties up money in your home that you can't easily access again.
With a fixed-rate mortgage, your interest rate and monthly payments stay the same for a set period - usually 2, 3, 5 or 10 years. This gives you certainty for budgeting and protects you if rates rise.
The trade-off is that fixed rates are often a little higher than variable ones, you won't benefit if rates fall during your fixed period, and you may face an early repayment charge if you want to overpay significantly or leave the deal early.
With a variable-rate mortgage, your interest rate and monthly payments can change, often tracking a benchmark like the Bank of England base rate.
Payments usually start lower than an equivalent fixed deal and can fall further if rates drop - but they can also rise, so you need to be confident you could afford higher payments if that happens.
With a fixed-rate mortgage, your interest rate and monthly payments stay the same for a set period - usually 2, 3, 5 or 10 years. This gives you certainty for budgeting and protects you if rates rise.
The trade-off is that fixed rates are often a little higher than variable ones, you won't benefit if rates fall during your fixed period, and you may face an early repayment charge if you want to overpay significantly or leave the deal early.
With a variable-rate mortgage, your interest rate and monthly payments can change, often tracking a benchmark like the Bank of England base rate.
Payments usually start lower than an equivalent fixed deal and can fall further if rates drop - but they can also rise, so you need to be confident you could afford higher payments if that happens.
With an interest-only mortgage, your monthly payments only cover the interest - none of it reduces the amount you originally borrowed. You'll need a plan to repay that capital in full at the end of the term, such as a savings vehicle like an ISA or investment fund, or a lump sum such as an inheritance.
Interest-only mortgages are less common for standard home purchases today and are now mostly used for specific products like buy-to-let mortgages.
Yes, you can switch to a repayment mortgage. Most lenders allow you to move from interest-only to repayment, either by remortgaging to a new deal or requesting a product switch with your current lender.
You’ll need to pass affordability checks, as your monthly payments will usually increase.
Switching can be a good way to start paying down your balance and reduce the amount of interest you pay over the long term.
Yes. Our expert mortgage brokers, Mojo, can give you free advice and help scour the market to find a repayment mortgage that's suitable for your needs and individual financial circumstances.
Yes, most providers offer joint repayment mortgages. The process is the same as applying on your own, you'll need a deposit and to show you can afford the monthly repayments and costs. Both applicants will have their credit records checked.
Capital is the amount of money you originally borrowed to buy your home. Every repayment mortgage payment includes some capital and some interest - over the term, your capital reduces to zero, at which point you own your home outright.
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