What is the difference between Capital Repayment and Interest Only?
You can choose from two methods of repaying your mortgage, according to your own personal circumstances.
Capital Repayment
With a Capital Repayment plan, your monthly payment covers the interest charged on your mortgage and it also reduces the outstanding balance each month in line with the term selected. With this repayment plan you can ensure your mortgage is fully paid off at the end of the mortgage term.
What you get with the Capital Repayment option:
- Interest and capital repaid - your monthly payment covers the interest and also reduces the total balance outstanding
- Peace of mind - providing all payments are made, the mortgage will be repaid in full at the end of the agreed mortgage term
- Flexibility - choose your repayment term up to a maximum of 25 years.
Capital Repayment is a repayment option on all of the available buy-to-let mortgage products.
Interest Only
With an Interest Only option, your monthly payment covers only the interest charged on your mortgage, freeing up cash to spend elsewhere or to invest to pay off your mortgage at the end of the mortgage term.
By repaying only the interest on your mortgage, your monthly repayments are lower than with an equivalent capital repayment mortgage.
What you get with the Interest Only option:
- Interest only - the monthly payment covers just the interest and the original capital amount borrowed remains outstanding throughout the term of the loan
- Lower monthly payments - because you are not repaying the capital your monthly payments could be lower than with a capital repayment mortgage
- Flexibility - Choose your mortgage loan term up to a maximum of 15 years
Your property may be repossessed if you do not keep up repayments on your mortgage.
Please note that buy-to-let mortgages from HSBC Bank plc are for properties located in the UK mainland only and exclude properties located in the Isle of Man and the Channel Islands.
