This is a mortgage where you pay monthly repayments on the interest of the mortgage only. The capital is repaid by a lump sum. This can be done by taking out a pension mortgage or an endowment policy which may increase enough in value to repay the original loan. You may also wish to sell the property and use the proceeds to repay the loan. There is a risk that there will not be enough money to pay off the original loan and lenders tend to offer these mortgages to borrowers in a strong financial position.
What is a Pension Mortgages?
This is a form of Interest Only mortgage whereby the interest is paid in monthly repayments by you and the capital is repaid at the end of the life of the mortgage by a pension's lump sum payment.