Mortgage repayment guide

Ways to pay back your mortgage

A handy guide to paying back your mortgage

Find out more about the different types of mortgages on offer and ways you can pay back your loan early - something which could save you thousands of pounds in interest payments.

Your home may be repossessed if you do not keep up repayments on your mortgage

3 ways to pay back your mortgage

There are two main types of mortgage payments. You can choose one or the other, or a combination of both.


Repayment mortgage

Capital and interest

  • Your payments are made up of interest and capital.
  • You gradually repay the loan over the term of your mortgage.

With a repayment mortgage you pay interest on the amount you borrowed and this is included in your monthly instalments. Make all your repayments and by the end of the mortgage term you'll have paid it all off.

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Interest only mortgage

For up to 75% loan to value mortgages

  • Your payments only cover the interest on your loan.
  • At the end of the mortgage you have to pay off the amount you borrowed.

With 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, or pension. 

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A combination of both

Repayment and interest only

  • Also known as a "part and part" or "part interest" mortgage.
  • The interest-only cap of 75% loan to value (LTV) still applies to combined mortgages.

You can combine both repayment types on one mortgage. For example, you could use existing investment plans to cover the interest-only element and have the remainder on a repayment basis.

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A little goes a long way

It doesn't take much to wipe years off your mortgage – and save thousands of pounds in interest payments. This is because every time you repay some of what you owe, you are charged less interest, so more of your future payments go towards repaying the outstanding debt. 

Things to consider

Be sure to save for a rainy day

Always consider saving some rainy day money for those unexpected moments life may throw at you.

Watch out for overpayment penalties

Most mortgages have a limit or minimum amount on overpayments, and paying more may incur penalty charges.

Timing can be very important

Check when's best to overpay. With some older mortgages you may be better making a one-off payment at the end of the year.

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