Is an Interest only mortgage for me?

Before we look at the positive and negative aspects of this type of mortgage we need to know how they work.
As the name suggests with an Interest only mortgage you only pay the interest on the loan, and pay nothing off the capital amount. With a normal repayment mortgage your mortgage payment is split into two parts. First you pay the interest on the mortgage and secondly you pay off some of the capital amount on the mortgage. At the end of a repayment mortgage you owe nothing and the property is yours.
On the other hand with an Interest only mortgage you never pay anything of the capital amount so for example if you borrowed £100,000 over 20 years and stayed with this type of mortgage at the end of the term you would still owe £100,000.
So why do people opt for interest only mortgages you may ask.
Probably the main reason is their affordability, if you choose an interest only mortgage your monthly payments will be considerably less, which can be attractive to first time buyers or those who are stretching their finances to buy a larger property which they can only afford on an interest only mortgage.
Short term this type of mortgage can provide a way for many to get on the housing ladder and a few years down the line when their income has gone up they can switch to a normal repayment mortgage. However it should be noted that the longer you leave it the larger your monthly payments will be.