Interest Only Mortgage
Are Interest only mortgages Available?
These types of mortgage are very popular as the monthly payment are more affordable than the capital & repayment option which is the preferred route or most of the high street, lenders
Why have Lenders shied away from these types of mortgages
As the name suggests, payments are of interest only and therefore lower than a repayment mortgage. At the end of the mortgage term, usually 25 years or less, the full mortgage amount will still be owed.
The most important thing to remember is to have a repayment plan in place to repay the amount borrowed by or before the end of the term. There are three main types of repayment plan, endowment policies, ISAs or pension. Depending on the mortgage lender and product selected, you may also be able to make extra lump sum overpayments to reduce the outstanding amount.
With the current low-interest rates on savings and investments we are experiencing, lenders have stricter rules around who they will lend to on this basis and many simply won’t support this kind of mortgage anymore.
Although the Interest only mortgage is now quite rare, they can still be found we can help you find an Interest only mortgage for the right circumstance.
Such as
- If you are looking for a mortgage that is 50% of the value of the property
- You need to have a Interest only mortgage for a limited period only
- You are an older client over the age of 55