From what I understand, any interest that is due is factored into the loan as a general repayment to the purchaser (bank) or as a payment of rent.
For instance, if you make an offer that is accepted on a property, let�s say �100,000. Typically your mortgage would be a 25 year repayment - say at 6% - would total around �195,000 at the end of the term. So the bank buys the property at �100,000 then sells it to you for �195,000 (presumably with some premium factored in for interest rate fluctuations) then you pay it back monthly as rent.
I think that�s generally how many of them work, unless anyone has a better idea.