Interest Only Mortgages are designed to keep your monthly payments as low as possible. You only pay the interest owed on the loan and none of the capital which means your monthly repayment remains low.
Repayment of the capital
You must be able to demonstrate to the lender how you will repay the capital at the end of the mortgage term by having in place an appropriate repayment plan.
Some examples of repayment vehicles include:
- Sale and downsize
- Sale of additional property
- Cash saved in a savings account or ISA (although some lenders are no longer accepting this as a repayment vehicle)
- Stocks and shares or a stocks and shares ISA
- Pension schemes
- Investment bonds
- Shares
- Unit trusts
- Regular savings plans (endowment policies)
- Other properties or assets
Your lender will review your chosen repayment vehicle to confirm if it is likely to pay off the capital at the end of the mortgage.
Benefits of an interest only mortgage
An interest only mortgage would be particularly suitable for those:
- In receipt of large bonus payments
- Who have assets which could be used to repay an interest only mortgage
- Who intend to downsize in the future
- Classed as a High Net Worth Individual
- On a complicated income structure with receipt of large bonus or equity share
- Later life scenarios where clients have an outstanding mortgage but are not ready to downsize
- Where current fixed term commitments are high, for example private school fees
Why Us ?
As mortgage experts with many years of experience, we help our clients assess their options. Interest only mortgages are able to offer a great deal of flexibility, but it is important to understand the associated risks. Our expertise is in creating an individual solution for your personal requirements.
We have close relationships with High Street banks, Building Societies, private banks, niche lenders and private investors, who offer interest only mortgage loans – call us today to see how we can help you.