When you take out a mortgage, you repay it monthly over a set number of years. Each payment usually covers:
- The loan itself (capital): the amount you borrowed.
- Interest: what the lender charges for lending you the money.
If you choose a repayment mortgage, you’ll pay off both the capital and interest each month, meaning you’ll own your home outright at the end of the term. If you go for an interest-only mortgage, you’ll just pay the interest each month and will need a plan to repay the loan later.