Financial Services > Mortgages > Interest Only Mortgages


This type of mortgage is only available on domestic property. The lender provides sufficient funds for you to buy the dwelling and a term is agreed for the loan. It remains your responsibility to repay that debt at the end of the agreed term or alternatively to find a replacement lender for a further period on an interest-only basis.

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In the past people have used savings schemes such as pensions, endowment policies and personal equity plans (PEPs) or individual savings accounts (ISAs) to build up capital to repay their interest-only mortgage at the end of the original term.

Whilst investment-backed mortgages are still popular today, there is an increasing tendency to follow the practice adopted in both Switzerland and Japan for many decades. It is perfectly acceptable to have an interest-only mortgage with no intention of repaying the debt until the house is sold. The sale can take place either when you decide to 'down-size' as part of your retirement plans or alternatively when you die.

Because the debt is not rising the interest element will become an increasingly less significant proportion of your income each month whilst you are working if interest rates remain the same and your pay rises with inflation or personal success.

Life assurance, critical illness insurance, accident sickness and redundancy insurance are all advisable in a variety of circumstances and so you should discuss this with Corrigans if you are interested in a mortgage of this type.