Difference between repayment & interest only

Skibunny40

This is probably a really stupid question: If the monthly payments for a repayment mortgage are £800, and for interest only are £400 ( same interest rate) does that mean that £400 is paid off the capital of the loan amount each month? Or is there some weird mathematical formula for working out how much of the capital I would be paying off each month? 

getmore4less

the magic(weird) is Amortisation.
as the capital reduces the interest bit  goes down and the capital bit  goes up.

Skibunny40

Thanks getmore4less, off to play with the amortisation calculator now!

getmore4less

Mortgages are very simple at the core there are only 4 variable and you only need 3 to do all the numbers.

in the simple form it is series of
new balance = old balance + interest - payment 
interest is a function of balance and rate.
payment is whatever you want( the amortization does the magic to work it out for amount,rate,term)

All the functions are built into spreadsheets so it is easy to build a model.