What is an Interest-Only Mortgage and How Can I Benefit?
An interest-only mortgage is when you take out a mortgage to buy a property, but instead of paying back a portion of the loan plus interest each month, you pay just the interest on the loan. At the end of the mortgage term you will still have to pay back the mortgage, so you will need to have a plan in place to do this. You may decide to sell the property and downsize or take out a savings plan to cover the capital balance at the end of the mortgage term.
Make Sure You Have a Plan in Place
Rules laid down by the Financial Conduct Authority state that lenders can only provide interest-only mortgages if there is a credible plan in place for repaying the loan. Historically, endowment polices that were sold to run alongside the mortgage, but fluctuations in the economy meant that many of these schemes did not pay out enough to cover the mortgage balance leaving owners with a large shortfall still to pay when the mortgage reached end of the term.
Let Us Work it Out with You
We’re looking at the loans market every day, and know exactly when interest rates change, new products become available or new incentives go online. All this, balanced with our knowledge and experience as independent brokers, means we’re in a strong position to find you the best loan for your circumstances.
Getting an Interest-Only Mortgage
It is now quite difficult to get an interest-only mortgage, but some lenders do offer products to those who can place a sizeable deposit and show a plan to pay off the loan at the end of term. They also favour buy-to-let landlords, where the house is generating a source of income greater than the interest payments, thus providing alternative assets.
How We Can Help
We’re nothing if not professional and thorough. If an interest-only mortgage is the right thing for your circumstances, we’ll go over the whole process from start to finish, finding the best product and making sure you can comply with all the evidence, paperwork and terms of the mortgage. Yes, there are hoops to jump through, but when you know what to expect, it all becomes a lot smoother.
Let’s Get Started
Get in touch with your local office and speak to one of our experienced advisers. They will be more than happy to go over all of the above and more. Getting a mortgage doesn’t have to be complicated. Let us do the hard work for you.