With this type of mortgage, you only need to pay off the interest during the mortgage term. You pay off the capital debt right at the end of the mortgage term.

The assumption behind this arrangement is that you’ll make simultaneous monthly repayments into an investment fund throughout your mortgage term. The theory behind this scheme is that your investment fund will grow and eventually leave you with more than enough money to pay off your capital debt.

It’s essential that you’re aware of the risks before deciding upon this type of mortgage; if your investment is unsuccessful, then you could lose your home. Bear in mind that if this does happen, it’s likely that it’ll happen at the end of your mortgage term when you’re close to retirement age.

If you do decide on this type of mortgage, consult an IFA who specialises in investments before you accept any offers. And remember to shop around!

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