repayment methods continued

With an interest only mortgage, you pay only the interest to your lender. In addition to this, you need to make a separate payment into a savings plan such as an ISA or endowment. The amount you pay into the savings plan is designed to build up a lump sum to pay off the mortgage at the end of the term.

It is your responsibility to ensure that you have sufficient funds to repay the full capital amount at the end of the agreed mortgage period.
As a third option, some lenders may allow you to combine both repayment options giving you the option of using any existing savings plans you may have in place to repay a part of the mortgage arranged on an interest only basis whilst keeping a further part of the loan on a repayment basis.

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