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Different repayment methods suit different people but the following are the main types :

Capital & Interest (also known as Repayment)

As the name suggests, your monthly mortgage payment will consist of both capital and interest. This means that your mortgage will reduce every month until it is repaid at the end of the chosen term. This method is the only method that guarantees that the loan will be repaid at the end of the term, assuming that you maintain your payments.

Interest Only

This method involves only a monthly interest payment. No capital is repaid on a regular basis unless you make separate capital payments.

In the past, an endowment policy was typically used to repay the outstanding capital at the end of the term although this is not generally recommended these days.

However, some people may still prefer the Interest Only method and use other methods to repay the capital such as ISAs, pension lump sums, other types of investments, sale of another property, an expected inheritance, or regular bonuses from employment.

It should be noted that some lenders will not accept Interest Only as a repayment method. Some lenders may accept a combination of the two methods.

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