Return to the Mortgage Glossary Home to view explanations for all mortgage terms. What follows is the definition for the term Repayment Mortgages as it relates to mortgages in the UK. Repayment MortgagesMortgages generally fall into one of two types, repayment or interest-only. A repayment mortgage is where the capital is repaid gradually over the term of the mortgage. Each Monthly payment is made up of interest due on the outstanding debt, and an additional sum applied to reducing the capital balance. The payments on a repayment mortgage are calculated to be a standard amount each month, regardless of how far into the mortgage you are (assuming interest rates do not change). As such, in the early years most of each month's payment is comprised of interest. In later years, more capital is repaid with the result that the balance outstanding reduces. Repayment mortgages have their pros & cons:
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