Ways to pay back your mortgage

• Repayment (capital and interest) mortgages
• Interest-only mortgages

• Pays off your interest and your loan
• Straightforward and predictable

A repayment mortgage repays the interest on your loan and the original sum you borrowed. Over time, you start to reduce the sum you owe - make all your repayments and you’ll own your home outright.

Back to top

• Repayments only cover the interest on your loan
• You still have to repay the sum you originally borrowed

As the name suggests, an interest-only mortgage only repays the interest on your loan.

If you have an interest-only mortgage, you’ll have to make separate plans to pay off the sum you borrowed. This is normally done through an investment such as an endowment, ISA, PEP or pension.

If the investment doesn’t produce the funds you’d hoped for, you’ll still have to repay the mortgage at the end of the term.

Back to top