Repaying your Mortgage

Interest only Mortgage
With an interest only mortgage, as the name suggests, you only pay the interest charged by the lender.

This means you need to some way to save the money to pay off the capital at the end of the term.
There are 3 main ways to do this;

• Endowment policies
• ISA's
• Pension plans

Most investment vehicles used to pay off the loan are not usually guaranteed to make enough money to do so. This could mean that there is a shortfall and you would therefore still have a debt outstanding at the end of the term.There are other ways in which you could repay an interest only mortgage i.e. if you were buying a property to let out, you could sell the property at the end of the term and repay the mortgage that way. Additionally some lenders will allow you to take an interest only mortgage (without repayment product) and convert it to capital and interest at a later date.