What are interest only and repayment mortgages?

Most mortgages are repayment mortgages. Your monthly payments will go towards both the interest charged on your mortgage and clearing the outstanding balance. By the end of the mortgage term, you will have paid off the full amount borrowed.

If you get an interest only mortgage, your monthly repayments only cover the interest owed, so your balance will not go down. At the end of the term, you will need to pay off the full balance. This means you will need to have saved up this amount separately using a repayment vehicle like savings, shares, an ISA or other investment.

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