Interest only mortgages have become more and more popular in the past few years ? probably as a result of the rise in house prices. With this type of loan, you pay off only the interest, so that your monthly repayments are lower than they would be with a capital repayment mortgage.
At the same time, you invest money in a separate savings scheme, and at the end of the term (usually 25 years), use the investment from the separate scheme to pay off the capital cost of your house.
This is a popular choice for people who would struggle to meet the mortgage repayments every month, or those who are confident that their investments will provide enough to cover the capital payment at the end of the term. The danger is that if your investment plan does not perform well View the rest of this article
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