repayment mortgage interest

In a repayment mortgage the interest is usually added at the end of each year, not the beginning, so you are always paying off some capital, albeit little, with each monthly payment, and there last payment at the end of the full term is the last year's interest, plus the last bit of capital. If you have Excel, there are templates which may show you how it works. Otherwise, you could set up a spreadsheet to illustrate the method.

You real problem is the charges associated with remortgaging, which will take away some of the benefits.

Yes. The way it works is that if, say (not that there would be much point, but for the sake of argument), you were to remortgage without fee to a new lender who charges the same interest rate, then, provided the new mortgage term ends on the same date the old one would have, the rate of capital reduction will not change.

Of course if you remortgage every 2/3 years to a new 25 year term, then the rate of reduction will slow down.

Well, provided the fees don't muck it up, it's always worth changing to a more competitive (i.e. lower) interest rate. The thing to note is that there is a tradeoff bewteen how much you pay each month, and how quickly the capital reduces. You could ask your existing lender to change the term, so that you would repay in, say, 18 years instead of 22, and your monthly payments will go up, but you will save in the long run.

If you can get a better deal for the same term, then see if the fees pay for themselves in terms of payments saved, taking a timescale view of the order of however long you would wait till the next remortgage. Basically, if your remortgage saves you only £5 a month, you would hope the fees would be no more than £180 or so.

No, interest is not "front-loaded". Interest works exactly like a savings account in reverse. If the lender charges 0.4% per month on a £100k loan, then you will pay £400 interest in (i.e. for, and at the end of) the first month. If you actually pay £649, then the balance at the start of the 2nd month will be £249 less and so you will pay only about £399 interest for month 2. But if you again pay £649, your month 3 balance will be down to £99501, and so it goes on. You will repay a little more each month than in the previous month.

It just so happens that there is a magic formula you can apply, which will achieve a complete repayment of capital after N months of paying a certain fixed sum each month (for £100k at 0.4%pm, this sum is about £649 when the term is 20 years).

So, your fixed payment (£649) has a high proportion of interest (£400) and a relatively low proportion of capital (£249) early on, and the opposite is true later on. That's not the same as saying interest is front-loaded, which I would take to mean you pay more interest early on than is rightly due for the period for which you rented the money.

If you remortgage to a new 25 year term, you would go back to reducing the balance at the slow early rate, but if you stick to the same, or change to an earlier term end date, then you will repay at the same or a higher rate. That's true if the interest rates are the same, in fact a change of rate will also affect the interest/capital split.

In message , GIT1298 writes

Sop long as keep each subsequent re-mortgage to the same original repayment date, and dont keep starting afresh with a new 25 year term, then you will be OK.