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How is interest calculated?

Most lenders retain interest, and a minority roll it up and if you have plenty of surplus cash per month you might get serviced.

Retained and rolled up interest is deducted from the amount you wish to borrow. 

You have to find sufficient funds to cover the interest for the period of the loan as well as the deposit. 

Retained is the most common and for the majority of the lenders this is the only option you have.

Serviced is like a traditional mortgage when you are allowed to pay the monthly interest from your income. 

Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.