(aka Capital and Interest Mortgages)
This is the old fashioned, traditional type of mortgage and remains the only way the property is actually guaranteed to be yours at the end of the mortgage term – provided you have repaid the loan.
Your mortgage debt is divided into capital repayments (ie repayment of the money you borrowed) and interest payments (ie repayment of the interest you’re being charged for the loan).
As you pay off your mortgage every month you’re paying off a bit of capital and a bit of interest until the full debt is repaid.
You usually pay off mostly interest in the early years and then gradually more of the capital debt. It may seem as if this is costing more but that’s because unlike the other types of mortgages you’re paying off the capital and not just the interest.
Related topics Should I choose repayment or interest-only?
Further reading about Repayment mortgages
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