An interest only mortgage is a type of mortgage where you will pay only the interest and does not repay the principal amount for a period of time and during this period; the loan balance will remain the same.
In twenties this type of loan was normal, as it worked fine as the home did not lose value and the borrower does not lose his job, but when there was depression in thirties that made these loans to get into the foreclosures, and the lenders stopped giving this kind of loans, as they wanted the loans that are repayable.
Today interest only loans are available for a period of 5 years only and at the end of the period, the payment is collected to the full amortizing level. The longer the interest only mortgage the larger the new payment when the term gets over, these interest only mortgages are especially for those who wanted to make less initial payment and has great confidence that they can make the huge amount when the mortgage term gets over.
With interest only mortgage the monthly payment you make gets covered for the interest alone but not the principal that is the amount you have borrowed , so at the end of the mortgage period you have to make...
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