Capital repayment mortgages

Essentially as with every mortgage or loan, every month you are charged interest. On the basis that there are twelve months in a year interest charged is approximately equivalent to 1/12 of the rate your lender is charging you per annum.

In addition to this cost you also have to pay an amount that over the term of your debt will repay it in full. This can be seen in the diagram below.

Please note the graph below is not accurate and is for illustrative purposes only.

So in the early years your monthly payment to your mortgage company is made up of interest and a bit of capital however as the years roll by and the debt reduces your overall payment is more made up of capital than interest this is due to the fact that the amount of interest charged reduces as the debt declines due to repayment.

All this considered, your mortgage payments are not necessarily the only expense to you as you should also consider taking out buildings and contents insurance and life cover.

FSA declaration and important text about mortgage advice

FSA declaration and important text about mortgage advice

Please find below links that may be of interest to some of our users by selecting any of the following links, you will leave the regulated site of MortgageRoute.co.uk. MortgageRoute.co.uk does not endorse and is not responsible for the accuracy of the information contained within these linked sites. Secured Loans Life assurance Payment Shield Whole Life Insurance