Interest Only Mortgages

When you take out any type of mortgage, in return for the money a bank
will lend you, you will be charged interest on the amount they lent you
until the amount is paid off in full in return for their service.
With an interest only mortgages any payments you make to your lender
will only go to paying off the interest on the loan and not the loan itself.
In contrast to a repayment mortgage, with an interest only mortgage,
your monthly mortgage payments are used to pay off just the interest
you are paying on the amount you owe.
Interest only mortgages tend to be popular, because they offer a
relatively cheap way to purchase a house, as the repayments you
make are comparatively small. The problem, however, is that you never
actually move forward to pay off the original debt.

If, however, you manage to sell your property for a profit then you will
be able to pocket or reinvest this profit, having only ever paid the
interest on the repayments of your initial property.

In most cases, the repayments work out cheaper than the actual
rental value of the property if you had intended, alternatively, to
rent a similar priced property.
In order to raise the actual capital on your property to pay off the
mortgage, you are advised to invest the money you save on the mortgage
repayments into a long-term investment fund. The associated advantage
of this type of mortgage is that if you invest wisely, then you should be
able to pay off your mortgage early. However, if you invest badly,
then you could end up losing a significant amount of your money,
and still have the original mortgage total outstanding.