An Interest Only Mortgage is one whereby your monthly payments consist solely of interest payment and not any capital repayment element. Therefore the balance size of your mortgage will remain the same, and will not be reduced at all by your monthly payments.

An Interest Only Mortgage can be useful for people purchasing a new property to pay interest only over an initial period, to keep their repayments low whilst setting up home. It is then possible to switch on to a repayment option when the time is right, so that you have the certainty that your mortgage will be repaid in full at the end of the term.