It seems like it’s calculated monthly.
So, ignoring early repayment fees, if I had 100k remaining on the capital balance of my mortgage but the interest rate is 5%, I can just pay 100k and the debt is settled?
You owe 100k + 5% interest per month, but because you settled the 100k you no longer need to be concerned about the interest balance?
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If there are no early repayment penalties, you only pay the interest on the current principal. You can theoretically pay it off early. That’s what happens if you sell the house while you still have a mortgage. The proceeds of the sale pay off the principal first. It can also be a good strategy (if there are no early repayment penalties) to increase your payment (or even make an extra payment) in the first few years. Paying down the principal in the first year will save you a lot of money at the end of the mortgage.
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