As the name suggests, the monthly payments are made up of both interest charged by the lender and a capital repayment element which ensures that the mortgage is repaid in full over the desired term. This type of mortgage is guaranteed to be repaid in full (assuming all monthly payments are made on time) and is ideal for those people who want the absolute certainty that the mortgage will be repaid without reliance on any outside factors.
Monthly Payment Breakdown on a £100,000 Capital Repayment Mortgage
At the start of the loan, the majority of the monthly payments are made up of interest charged by the lender and only a small proportion is going towards reducing the mortgage balance. It takes until approximately year 14 for the capital repayment element to become greater than the interest charged and then significant reductions in the mortgage balance will be seen.