With an interest only mortgage you pay off the interest on the loan and none of the outstanding capital until the end of the mortgage term. Your monthly repayments are usually made up of two parts. 1: Interest on the capital that you owe the lender. 2: Contribution to an investment plan designed to pay off the outstanding capital at the end of the mortgage term. Interest only mortgages usually have lower monthly payments than a repayment mortgage but are not guaranteed and you should also add into the monthly payment the cost of the investment/savings vehicle being used. There is no guarantee that the investment plan you choose will generate sufficient capital to pay off the outstanding debt at the end of the mortgage term.