Redemption-free

With an interest-only mortgage, you pay only interest during the term. So you don’t redeem anything. At the end of the term, the debt to the bank is the same as at the start. Meanwhile, you do have the lowest monthly costs with this form of repayment. With an interest-only mortgage, it is important to consider whether and how you will be able to pay the debt at the end of the term.

For new mortgages, the repayment-free portion may not exceed 50% of the home value. You must repay the rest of the loan on an annuity or straight-line basis.