The Interest Only Mortgage

Interest payments are made to the lender each month. Only at the end of the term is the capital repaid.

Some borrowers may choose to sell the property to do this but some use a stock market based, regular savings plan to build up a suitable fund. The value of this fund will be dependent upon investment performances.

Due to the long term nature of the investment, it is impossible to accurately predict its maturity value. There could be a surplus or a shortfall at the end of the term.

There risks associated with this type of mortgage.

The Repayment Mortgage

The loan is repaid gradually over the term of the mortgage.

Provided all payments are paid in full and on time, the loan is guaranteed to be repaid at the end of the term.