Have the luxury of a home with an interest only mortgage with lower monthly outgoings then a regular mortgage.
© 2007 Michael J Alexander
Your home may be repossessed if you do not keep up repayments on your mortgage. Written quotations compliant with the Mortgage Conduct of Business (MCOB).
Featured in The-Mortgage-Hub ã 2006
Interest and Capital Finance
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Interest Only Mortgages
If the idea of renting is not desirable and you feel that you could not afford a mortgage at the present time then why not take an interest only mortgage until you are able to pay capital and interest. Interest only mortgages is where your monthly payments are composed of interest only ignoring capital, as a result the balance of your mortgage will remain the same and will not be reduced until you decide to pay a mix of capital and interest.
Some lenders charge interest on a daily basis and others on an annual basis, if possible its ideal to avoid annual interest calculations as you pay the same amount of interest throughout the year until the year is up and the interest is recalculated which results in you paying more. If the interest is calculated on a daily basis the interest is recalculated as you pay the capital on a property meaning a deduction in the interest rate.
If you proceed in taking out an interest only mortgage it is important that you consider how you will pay the mortgage at the end of the term. Many use interest only mortgages to stand ground in their new property until they have a secure income and or financial routine, many first time buyers also opt for interest only mortgages to get onto the property ladder.
It is also important to remember that failiure to repay the mortgage at the end of the term can lead to reposession.
Interest only mortgages are not always suitable as borrowers should be aware that when switching from interest only to capital and interest will mean an increase in the monthly payments, it is important that you consult with a qualified financial adviser such as us before you opt for an interest only mortgage.
Popular Uses
- Interest only mortgages for first time buyers
- Interest only mortgage for buy to let or investment properties
Remember!
Interest only mortgages are generally lower then mortgage payments but this will change upon switching to capital and interest.
It is always a good idea to consider your affordability, remeber if you can afford capital repayments during the term ensure that you can maintain throughout the duration of the term to avoid risk of property reposession.
We are independant financial advisers regulated by the FSA, we can assist you further with your enquiries simply give us a call today on 0845 2 605 506 or fill out our call back form and we will call you.
This is a very popular way to buy a home. This type of mortgage is designed to offer the lowest monthly payment possible as you are not paying off any of the capital balance of the loan. Due to the lower payment, you may be able to afford a more expensive property and stay within your interest only mortgage budget.
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