With an interest only mortgage, you borrow a lump sum secured against the value of your home. You pay interest on the loan each month, and the lump sum you originally borrowed is repaid when your home is eventually sold. You need to be able to afford the monthly interest payments out of your pension or other income.
The interest rate may be fixed or variable. But if it is variable, and your pension or other source of income is fixed, you may find it more difficult to meet your repayments if interest rates rise.
