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Interest only mortgageWith this type of mortgage all you pay each month is interest. You do not pay back any of the money you have borrowed until the end of the term. If you choose an interest-only mortgage you must make sure that you will have enough money to repay your mortgage at the end of the term. Many people with interest-only mortgages use an endowment, personal pension plan or ISA.These types of mortgage are generally considered more risky than a repayment mortgage as they depend on investment returns and there is usually no guarantee that there will be enough money at the end of the term to repay the mortage in full. This type of mortgage usually has lower monthly payments than a repayment mortgage, but you should remember to add in the cost of any endowment policy you have to pay as well. You should also remember that if your endowment policy does not pay you the amount you need at the end - you will still owe the remaining amount on your mortgage. |
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