Other types of mortgages
Interest-only is one method of arranging your mortgage. The two other types are:
Capital and interest – Sometimes more commonly referred to as a repayment mortgage. This is where the monthly payment consists of the interest for the loan together with a calculated amount of capital. The amount paid each month then gives the assurance that the loan will be repaid at the end of the term.
Part and part – This method is a combination of repayment and interest-only. Some of the mortgage is therefore being repaid each month where some will simply be just the interest. This is slightly more unusual and less commonplace than simply having all one method.
This type of mortgage can be useful for some. For example, where a full interest-only is not available, or they only have an investment to over some of the borrowing.