Interest-only mortgage
An interest-only mortgage is one where you pay only the interest each month and still owe the full loan at the end of the term.
Also known as: interest only mortgage, interest-only mortgages
Monthly payments are lower than on a repayment mortgage, but you need a separate way to repay the capital, such as savings, investments or selling the property. Lenders will ask for evidence of a credible plan.
Without a repayment plan, you could face a large debt at the end of the term. It is much less common for residential mortgages today.
An authorised mortgage adviser can explain how this applies to your circumstances, and MoneyHelper offers free guidance. Your home may be repossessed if you do not keep up repayments on your mortgage.
Related terms
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