Repayment mortgages are ideal if you want the reassurance that your debt to the mortgage lender will be repaid in full at the end of the loan period.

Each monthly instalment pays off both the capital (i.e. the money borrowed) and the interest charged on the amount outstanding. That’s why you may hear this referred to as a capital and interest mortgage.

The monthly payments of a repayment mortgage are typically higher than those for an interest-only mortgage because you are paying off all the capital yourself. An interest only mortgage relies on the performance of a separate investment to pay off a portion of the capital.

As the term of your mortgage continues, the amount that you owe the lender will decrease, making you less likely to suffer from negative equity. You will also benefit from any property value increases as your mortgage total decreases.

You will need to arrange life insurance to accompany a repayment mortgage - this is something that most lenders insist on and will add to your costs.

Advantages

The total amount will be repaid by the end of the loan term.

You will reduce your debt as each month passes.

You do not have to take on the risk of an investment in the stock market.

You will see the benefit of any equity in the house.

Disadvantages

You would not have the opportunity to use a well-performing investment to pay off your mortgage early – although you could make overpayments to achieve this.

If you move house after just a few years, the majority of your payments will have been towards interest, not capital. This means that if you are trading up, many people have to begin another twenty five year loan again. It is not unusual to do this several times in the first few years of property ownership, so your twenty five year mortgage term will not decrease for several years. Lenders are now addressing this with portable loans. These can be taken with you and secured on your new property.

You have to find and pay for suitable life insurance cover.