"Interest only mortgages" are designed to offer the lowest payment possible by not paying any of the balance of your loan off. Due to the lower payment, you may be able to stay within your budget more easily with an interest only mortgage. Investments are used as a means to pay off the interest of the mortgage loan. If you come in to some money you can also normally choose to pay extra and pay off some of the mortgage.
Initially interest only mortgages were introduced for people with seasonal or unpredictable incomes. People with low base salaries or slow business periods could get a home in keeping with their total annual income, whilst paying off their mortgage with their commission or good seasonal earnings. Interest only can also free up money for investments or pensions. Recently, interest only mortgages have been taken up by a growing number of people buying and for remortgages.
An example of how powerful this tool can be illustrates why this option has become popular:
On a £250,000 mortgage at 6.000% for 30 years- Mortgage with interest = £1498.88
Interest Only payment at 6%= £1250.00
Total Monthly savings= £248.88
