thrush pretend its 75k worth of savings.... at 5% interest in a year youd get given £3750 interest and be a pretty happy chap no doubt....

if you lend 75k at 5% then you have to pay them the interest... therefore the £312 a month = 3750 total.

and you still haven't knocked down the original sum of 75k - on the higher figure on the repayment mortgage you are paying the £312 interest and £126 off the balance... so basically 75000 + 3750interest.... less payments of £5256 (£3750 and £1512) - so at the end of the first year... you'd have a balance left of £73488.

the interest on this amount would be slightly lower - with your repayments the same you pay more of the balance and this continues until 25,30 or 35 years later you aint got no more to pay off!

interest only is a bit of a swiz as you are only paying the 3750 per year
if you did it straight... it would be £312 interest and you would then have to save an extra £250 to make 75k in 30 years - i.e. £562

so you'd basically pay the interest only bit and then have to save in the background just enough money in interests accounts, endowments etc to try to invest enough money to pay it off....

bit of a gamble if the bit extra you are investing doesnt make enough money to generate 75k at the end then you're fooked!!