Mortgage-Calc.uk

Last updated: 7 August 2025

UK Mortgage Types Explained

Understanding the different types of mortgages available in the UK

Most Popular

Repayment Mortgage

Pay off both interest and capital each month

Advantages

✓Guaranteed to pay off your mortgage by the end of the term
✓Monthly payments reduce the amount you owe
✓Peace of mind knowing you're building equity

Disadvantages

✗Higher monthly payments than interest-only
✗Less money available for other investments
✗Slow equity building in early years

Best For:

First-time buyers and those wanting certainty

Lower Payments

Interest-Only Mortgage

Pay only the interest each month, capital due at end

Advantages

✓Lower monthly payments
✓More money available for investments
✓Flexibility in how you pay off the capital

Disadvantages

✗Must have a repayment plan for the capital
✗Risk if investments don't perform
✗More expensive overall

Best For:

Property investors and those with solid investment plans

Flexible

Part & Part Mortgage

Combination of repayment and interest-only portions

Advantages

✓Balance between security and flexibility
✓Some guaranteed equity building
✓Lower payments than full repayment

Disadvantages

✗More complex to manage
✗Still need repayment plan for interest-only portion
✗May limit some mortgage deals

Best For:

Those wanting flexibility with some security

Which Mortgage Type Should You Choose?

Consider these factors when deciding on your mortgage type

Choose Repayment If:

• You're a first-time buyer
• You want certainty and peace of mind
• You don't have alternative investment plans
• You prefer simplicity

Choose Interest-Only If:

• You're an experienced property investor
• You have a solid repayment strategy
• You want to maximize cash flow
• You understand the risks involved

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