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INTEREST ONLY
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MORTGAGES

Interest only mortgage

How does it work?

Your monthly payments represent only the interest due to the lender, and do not include repayment of capital. Your total loan must be repaid at the end of the mortgage term. You therefore need to arrange additional investments which will generate sufficient capital to repay the loan.

ADVANTAGES: You can choose from a variety of investments, some of which have tax advantages. Should you move or arrange a remortgage, your investment can usually be reallocated to the new mortgage.

DISADVANTAGES: Unlike a repayment mortgage, the amount of debt outstanding does not reduce over time, and as with many additional investments you could choose from, there is no guarantee that those chosen will grow sufficiently to repay your loan.