With a repayment mortgage (sometimes called ‘capital and interest’) your mortgage payment covers the interest and also helps to reduce the amount you owe (‘the capital’). As long as you keep up your payments, you can be sure your whole mortgage will be paid off at the end of the mortgage term.
Interest only mortgage+
With an interest only mortgage your mortgage payment only covers the interest on what you owe. At the end of the mortgage you pay off the amount you’ve borrowed using savings or investments built up during the mortgage period.
If you take out an interest only mortgage you must be sure that you will have enough money to repay the mortgage at the end of the term.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.