Mortgage basics

Lesson 4 of 12 in our free Buying a Home guide: a 5-minute money game with the key points below.

This lesson is in the full version.

Free with a code from your uni, college, council, landlord or employer (worth £600/year). Lesson 1 of Buying a Home is free for everyone.

Questions you'll answer

£180,000 repayment mortgage at 4.5% over 25 years. Roughly what's the monthly payment?

Same £180,000 loan at 4.5%, but over 35 years instead of 25. What happens?

You own the home outright at the end of the term → Repayment. Each payment covers interest AND some of the loan.
Lower monthly payments, but you still owe the full loan at the end → Interest-only. You need a separate plan to repay it all.
The most common type for first-time buyers → Repayment. Lenders usually want first-timers on repayment.