Interest Only Mortgages

Many people take out interest only mortgages just to keep their repayments down especially with the interest rates going up. Borrowers are assuming that their house prices are going to for up and they will cover the cost of the mortgage.

What is a interest only mortgage?

An interest only mortgage is when your monthly repayments only cover the amount of the interest occurred on your mortgage for that month. At the end of the borrowing term you will still owe the lender the total amount you have borrowed. To pay the remainder you will be paying into a saving plan which will help towards paying off part or all of the remaining amount. Many borrowers take the option of overpaying their monthly repayments to reduce the final amount at the end of the interest period.

 

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Advantages of an interest only mortgage

Taking out a interest only mortgage has many benefits of it, a borrower has the flexibility to pay a small sum of money each month but if they decide to pay more one month they can.

 

How is the lump sum paid off?

When taking out an interest only mortgage you must always know that once the interest has been paid off you must pay back the borrowed amount as a lump sum. The lump sum would normally be made up of saving which you had made during the mortgage term, this could be through ISA's or other saving plans.



If you would like to find out about interest only mortgages or would like general questions answered fill in our mortgage enquiry form and a mortgage broker will get in touch with you as soon as possible. They will answer any questions you have and offer you the best rates available from leading UK lenders.


Advantages of interest only mortgages
Find out about the advantage and disadvantages of taking out a interest only mortgage

Mortgage advice
Get the cheapest rates available from our mortgage advisors.

Mortgage Types
Find out about other mortgage types available.

Buy to let mortgages
How can a buy to let mortgage help you?

 

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