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Requires you to make monthly payments to the lender, which consists of both capital and interest. The mortgage will gradually be repaid over the term of the loan

Interest only

You only pay the lender interest only during the term of the loan. At the end of the term the borrowed capital will need to be paid. There are several ways in which this capital can be paid, normally by having contributed to an appropriate investment contract, designed to pay the mortgage at the end of the term, e.g. Individual savings accounts, endowments and pension plans.

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