How does repayment mortgage work

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Join Which? Continue reading. Interest-only mortgages explained. Retirement interest-only mortgages explained. All 13 articles in guide. How much can you borrow when taking out a mortgage? How is coronavirus affecting house prices? Related guides in Which? In Insurance. Home insurance explained. What is home insurance? How to find cheap home insurance Contents insurance explained. All 8 guides.

Buying a home. How to buy a house Finding the best place to live The cost of buying a house. All 14 guides. Stamp duty. With a typical fixed-rate loan , the combined principal and interest payment will not change over the life of your loan, but the amounts that go to principal rather than interest will.

In the beginning, you owe more interest, because your loan balance is still high. So most of your monthly payment goes to pay the interest, and a little bit goes to paying off the principal. Over time, as you pay down the principal, you owe less interest each month, because your loan balance is lower. So, more of your monthly payment goes to paying down the principal.

Near the end of the loan, you owe much less interest, and most of your payment goes to pay off the last of the principal. Compare mortgages. See the latest mortgage deals on Which?

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