Which mortgage type is designed to repay the full loan by the end of the term?

Which mortgage type is designed to repay the full loan by the end of the term?

• A. Interest-only mortgage
• B. Flexible mortgage
• C. Repayment mortgage
• D. Balloon mortgage

Answer: (C)

The main idea is a mortgage where regular payments are structured to eliminate the loan balance by the end of the term. A repayment mortgage achieves this by including both interest and a portion of the capital in each payment, so the outstanding balance decreases over time until it reaches zero at the end of the term. In contrast, an interest-only mortgage asks for payments that cover only the interest, leaving the principal to be paid in full at the end; a balloon mortgage features a large lump-sum payment at the end to settle the balance rather than amortizing it throughout the term; and a flexible mortgage may allow varying payments or overpayments but does not by default guarantee full repayment by the end unless the balance is actively cleared. Therefore, the repayment mortgage is the type designed to repay the full loan by the end of the term.

The main idea is a mortgage where regular payments are structured to eliminate the loan balance by the end of the term. A repayment mortgage achieves this by including both interest and a portion of the capital in each payment, so the outstanding balance decreases over time until it reaches zero at the end of the term. In contrast, an interest-only mortgage asks for payments that cover only the interest, leaving the principal to be paid in full at the end; a balloon mortgage features a large lump-sum payment at the end to settle the balance rather than amortizing it throughout the term; and a flexible mortgage may allow varying payments or overpayments but does not by default guarantee full repayment by the end unless the balance is actively cleared. Therefore, the repayment mortgage is the type designed to repay the full loan by the end of the term.