An interest-only mortgage offers a way to purchase a property that will be cheaper than with a capital repayment mortgage on a monthly basis although will cost more over the term of the mortgage, because borrowers are only paying off only the interest and not the capital. For example, a £150,000 mortgage at 5% over 25 years would cost £625 per month interest-only, and £877 per month capital repayment.

The downside of an interest only mortgage is at the end of the mortgage term you will still owe the capital payment meaning you will still have the full £150,000 debt outstanding whereas with a repayment mortgage you would have cleared the debt.

Many people take on an interest-only loan as either first-time buyers or next-time buyers, with the intention of switching to a repayment mortgage later on, but anyone considering doing this should beware the pitfalls. It is easy to get used to a certain level of repayments and keep putting off paying the extra.

When you enquire for a mortgage via wise buy you will be given no obligation help and advise from a fully qualified mortgage adviser who can answer any questions you may have about the differences between an interest only mortgage & a capital repayment mortgage