Finance glossary
Repayment Mortgage
Also known as: Capital repayment mortgage
In simple terms
A repayment mortgage is one where each monthly payment covers the interest plus a slice of the amount you borrowed — so if you keep up the payments, the debt is fully cleared by the end of the term.
On this page
What does repayment mortgage mean?
A repayment mortgage — sometimes called a capital repayment mortgage — is the most common type in the UK. Every monthly payment is made up of two parts: the interest for that month, and a portion of the capital (the amount you originally borrowed).
Because you are steadily paying down the capital, the balance falls month by month, and provided you keep to the payments the mortgage is guaranteed to be cleared at the end of the term.
How a repayment mortgage works
In the early years, most of each payment goes on interest and only a little on the capital. As the balance shrinks, the interest portion falls and more of each payment chips away at the capital — so the debt reduces faster later on.
The monthly amount depends on how much you borrow, the interest rate and the term. A longer term lowers the monthly payment but means you pay more interest overall; a shorter term costs more each month but less in total.
How could this affect me?
A repayment mortgage gives certainty: as long as you make the payments, you own your home outright at the end with nothing left to repay. There is no separate investment or plan to arrange to clear the balance.
Overpaying, where your deal allows it, reduces the capital faster and can save a large amount of interest and shorten the term — though some deals cap penalty-free overpayments at around 10% a year.
Things to watch out for
- Monthly payments are higher than on an interest-only deal, because you are also repaying capital.
- Stretching the term to lower payments increases the total interest you pay over the life of the loan.
- Some deals charge an early repayment charge if you overpay beyond an annual limit or clear the mortgage early.
Know your rights
- Mortgages are regulated by the FCA under its Mortgage Conduct of Business (MCOB) rules, which require lenders to lend responsibly and treat you fairly.
- A lender must normally get a court order before repossessing your home, and repossession should be a last resort.
- If a lender treats you unfairly, you can complain and escalate to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, Repayment mortgages explained (opens in a new tab). Accessed 22 Aug 2026.
- FCA, MCOB — Mortgages and Home Finance: Conduct of Business (opens in a new tab). Accessed 22 Aug 2026.