Interest-Only Mortgage
Mortgage where only interest is paid monthly; capital owed at term end.
Full definition
A mortgage where monthly payments cover only the interest accrued. The full capital balance remains owed at the end of the term and must be repaid in full at that point. Now mainly used for buy-to-let and some specialist residential cases. Residential interest-only requires a credible repayment vehicle.
How this affects you
Whether interest-only mortgage is relevant to your mortgage depends on your circumstances — lender, product, deposit, employment, credit profile, and stage of application. An FCA-authorised mortgage broker will tell you exactly where it applies to your case.
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