Another term for a capital & interest repayment mortgage.
Ths means that the monthly installmenst on the mortgage loan include both the interest due on the loan and the principal of the loan. By the end of the mortgage term the loan will then be paid off and the interest will have been paid.
To decrease the amount of interest paid some mortgages allow you to overpay on monthly payments. As nterest is generally front loaded on loans this can mean a sharp decrease in total interest payment, as well as a reduction in the mortgage term.
Example-
Loan of £100,000 over 25 years at 5%
Monthly repayment is c. £584. However if you overpay by £100 per month the mortgage term reduces from 25 years to 18 years 10 months and the interest paid reduces from £75377 to £54455.
