Interest Only Mortgages
If you’re in that unenviable position, you’ll need to find out what your options are. In this guide, we look at the problem in detail, including giving you some ideas on how to deal with a potential cash shortfall.
What’s an interest-only mortgage?
If you have an interest-only mortgage, you will only be required to pay the interest on your loan every month. That means that the size of the actual debt you owe remains the same throughout the mortgage term. When the term ends, you’ll be expected to repay the lump sum you borrowed in one go.
That’s different to a repayment mortgage where you’ll pay back both the capital loan and the interest it attracts each month. By the end of the term of the mortgage, you’ll have repaid everything that you borrowed.