MomenTUM Mortgages

How do repayment mortgages work?

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Repayment mortgages are a type of mortgage that has become more popular over the last decade. A repayment mortgage is where you pay back your loan in equal amounts every month, typically over 25 years. Repayment is calculated by dividing the amount owed with an interest rate to create an amortization schedule that will be paid off gradually, meaning you will end up paying less interest overall. Here we talk about what repayment mortgages are and how they work, as well as their advantages and disadvantages. We also discuss when people can get a repayment mortgage and how this links with retirement age.

How repayment mortgages work

The lender figures out how much interest and capital you need to pay each month in order for your mortgage loan to be repaid at the end of the term. At first, you will only take off a small amount of capital each month but after several years this changes so more repayment off the capital comes from monthly payments made.

In the final few years, you are paying back mainly the capital (the amount borrowed) and very little interest. This is because, at the start of the mortgage, most of your payments went towards paying the interest.

  • An example repayment mortgage –

Let’s say you borrow £200,000 at an interest rate of four percent over 25 years. Your monthly repayment would be around £950 (depending on your personal circumstances). On top of that amount, there are other costs to consider like paying for the valuation or legal fees and stamp duty.

Advantages and Disadvantages of repayment mortgages –


  • You end up paying less overall when you consider the interest paid out on your mortgage. You can usually get a better deal when it comes to rates, especially if you have a good credit score (check yours for free with our service).
  • There is the flexibility to overpay your mortgage each month if you wish.
  • You’re guaranteed to repay the debt by the end of the term.


  • The monthly repayments are higher than compared with an interest-only or part and part mortgageWhen do repayment mortgages end when they expire and how does this link with retirement age? Repayment Mortgages are available for anyone over 18 years old, but the term of the mortgage usually ends when you reach retirement age, which is currently 68 for most people. You can however choose to extend your mortgage term past state retirement age but there are fewer lenders that will allow this, you usually need to evidence you are paying into a pension and be more than 10 years away from retirement, you will also need to justify that you can work past state retirement age, this may be possible for an office worker and not for a scaffolder . If you do not fill this criteria there are lenderd that will still lend i to later life but they will require evidence of pension income.

So there you have it! Repayment mortgages are a great way to repay your loan gradually over time and save on interest. They offer flexibility to overpay each month and have a guaranteed end date, making them ideal for those wanting security. However, the monthly repayments are higher than with other types of mortgage.

Momentum Mortgages are mortgage brokers based in Sevenoaks, Kent. We help people to buy, invest or remortgage property while reducing stress and saving time. We have helped clients all over Kent including Tunbridge Wells, Tonbridge, Maidstone, Swanley, Dartford, Bromley, Orpington and more.

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