An interest only mortgage is when you only pay the interest part of your mortgage on a monthly basis, for a fixed term. The term is usually between 5 and 7 years. After the term is over, many refinance their homes, make a lump sum payment, or they begin paying off the principal of the loan.
With an interest only mortgage. Most of your monthly payment will be made up of interest only, with a little going towards the actual loan. Over time, your monthly payment will start to include more of the actual loan, and loose interest rate, which means that your monthly payments can increase.
The fact that you will still owe you an amount when interest in personal, will make most lenders have you noticed that you place the nation that you can afford a lump sum payment. We need to do. The benefit of this type of mortgages that you will have low monthly payment initially which gives you time to save up enough money to repay your mortgage, or build up a lump sum payment that you can use to pay towards your main mortgage amount.
There is also not necessarily a guarantee that your savings plan will do well enough for you to be able to repay the mortgage in full, as many people have found out. Provided you keep up your repayments, there is no danger of not repaying a repayment mortgage in full. But it is always a good idea to work on a strategy to make sure that you will be able to repay your mortgage when it is due, or to make a large enough lump sum toward the main mortgage amount when the interest portion has been paid off.