There are currently around 6 million homeowners who have an interest only mortgage. This type of mortgage means that the monthly repayments that you make are just taken off the amount of interest that the mortgage accumulates. The capitol which you borrowed must be paid back when the mortgage has run its terms.
The interest only mortgage seems to be very popular with those who are house buying for the first time. Recent research showed that the amount of first time buyers taking out an interest only mortgage rose to 18%. The mortgage could be popular because the rates of interest are usually a lot lower than a repayment mortgage. Due to this it is the only type of mortgage that many starting out first time in buying can afford.
However while low rates of interest are a good thing the down side is that when the term of the mortgage comes to an end you will still owe the same amount of money that you started out owing. If you do not have a means of paying this then of course you would have to take out another loan.
Lenders have perhaps become a little lack with this type of loan because years ago you would have to be able to prove to them that you had means...
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