The full balance of the mortgage remains outstanding for the entire term of the mortgage and the monthly payments are made up of:
- Interest charged by the lender
- Separate payment into an investment that is designed to repay the outstanding mortgage at the end of the desired mortgage term.
However, there is no guarantee that the mortgage will be repaid in full and is obviously reliant on the performance of the investment chosen to help repay the mortgage.
Generally speaking, most people who have interest only mortgages will have one of the following repayment vehicles:
- ISA / PEP
Should you require any advice on any of the above repayment vehicles, we will be happy to refer you to an independent financial adviser.