Interest Only Vs Repayment Mortgages

Simply put, a repayment mortgage is where your mothly mortgage payment pay off both the interest on the mortgage loan and the loan amount. This means that at the end of the loan term, be it 25 years or 50 years, the mortgage will be ours with the property fully paid off.

An interest only mortgage is different in that at the end of the mortgage term the initial purchase price of the property is still outstanding... ie you have only paid the interest on the loan. Interest only purchasers need to find other means of paying off their mortgage loan principal.

A repayment mortgage is the standard way to pay back a loan for a home. However, recently it has become increasingly popular for people to go on interest only deals in the early years or when hard times hit, and then move back to a repayment mortgage later on.

Mortgages can be classified by type and then by their features. Below are the major types of mortgage as classified by mortgage brokers and mortgage lenders. Within these "mortgage types" are different mortgage products with different features. For example, you can get Fixed rates, variable rates, no redemption fees, base rate trackers, 90% mortgages, and interest only mortgages. For more information on mortgage criteria and terms take a look at our alphabetical mortgage glossary.

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