An interest only mortgage is where the lender only charges you interest on the money you have borrowed. You don't pay the capital back until the end of the mortgage. The lender may ask you at the outset how you will eventually repay the outstanding capital and may even ask you to provide an investment plan of one type or another to repay the loan at the end of the term, but usually they will leave the repayment plan entirely up to you.
Every month, you pay interest to the lender for the duration of the loan. The lender calculates your monthly repayments depending upon the loan size and the prevailing interest rate. At the end of the loan period, the lender will expect the initial capital they lent you to be repaid in full by whatever means you have arranged.
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