Equity Release Schemes - Capital & Repayment Mortgage

capital and repayment mortgage


Capital and repayment mortgages offer guaranteed debt repayment over a specific term.


This type of residential mortgage works by the lender dividing the outstanding debt into
capital repayments and interest payments. Each time a monthly payment is made part of
capital & the accrued interest is repaid. This has the effect of the amount borrowed

decreasing over the term, resulting in the mortgage balance being fully repaid.


Should you choose a capital & repayment mortgage?

Dependent upon attitude to risk will determine which type of mortgage repayment scheme you should select. A
capital and repayment mortgage provides security of repayment. As long as monthly payments are met, the
mortgage will be repaid. This is achieved because in the earlier years you are paying mostly interest. The capital
repayment element is slowly eroded over time, with more debt being repaid as the years roll by. This may seem
inflexible & expensive, but unlike the other mortgage types you are paying off capital & not just interest.


Features of a capital and repayment mortgage

One of the differences between capital & repayment and other mortgage options is that the balance reduces over
the term of the mortgage. Unlike an interest only mortgage, these repayment schemes work on a capital & interest
basis. Therefore, as the balance diminishes, less interest is being charged by the mortgage company. This is where
the repayment of the capital element increases & signs that the mortgage balance is reducing becomes evident. As
long as property values remain level, the property owner will see a greater equity share building within their property.


Can I have a capital and repayment mortgage in retirement?

People having mortgages that run into retirement is commonplace. Be it poor advice, investment performance or
previous employment issues. However, there are still capital and repayment mortgages available into retirement
given the right personal circumstances. There are limitations, particluarly the term available over which it can
be repaid. Unlike an interest only mortgage, with a repayment mortgage, the shorter the term the more expensive
the monthly repayments. The factor that may rule out a capital and repayment mortgage for many is cost.



Advantages of capital and repayment mortgages

• You are safe in the knowledge, that as long as monthly repayments are maintained then the mortgage is

guaranteed to be repaid at the end of the term

• As the balance reduces over the years, a repayment mortgage increases equity within your property

• No reliance on any investment performance to repay the mortgage at the end of the term



Disadvantages of capital and repayment mortgages

• In the earlier years, mostly of the monthly payment is comprised of interest, so little capital is repaid

• Repayments are higher than an interest only mortgage

• If you move regularly, not much capital is actually paid off


Compare Equity Release have access to the whole of the mortgage market and deal with lenders that offer
mortgages into retirement. We have access to mortgagees that will lend upto age 80 on a repayment basis.

Repayment mortgages in retirement can still assist with house purchases or used for remortgage purposes.


Call FREEPHONE 0800 678 5159 to speak to your local independent mortgage adviser.

Or request a quote to see how capital and repayment mortgages could act as an alternative to equity release.





Think carefully before securing debts against you home.

Your home maybe repossessed if you do not keep up repayments on your mortgage.





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CompareEquityRelease.com helps you to compare and arrange equity release schemes from the whole of the equity release market:

Aviva | Bridgewater | Hodge Lifetime | Just Retirement | LV= | more2life | One Family | Retirement Advantage | Pure Retirement L&G Crown