Interest Only Mortgage
Repayment mortgages are made up of 2 parts. The capital part and the interest part. With an interest only mortgage you only pay back the interest part of the loan. Which means without some kind of repayment vehicle running alongside the interest only mortgage the borrower may never have enough money to repay the capital part of the loan.
Most people who use this type of product will have investments, endowments or savings in place to pay off the capital part of the loan which will coincide with when the interest only mortgage ends. However investments can go up as well as down so there are no guarantees that the repayment vehicle will be enough to repay the capital. You should seek professional investment advice from an IFA if your thinking of opting for this type of mortgage.
Some borrowers take out interest only mortgages with no repayment plan in place. This is not advisable and many lenders are tightening up on their criteria for lending with proof of a repayment plan needed to proceed on this basis.
At North Mortgages our Mortgage Experts will take care of everything on your behalf. Remember, we source mortgages from the whole of the market, so you know your getting the best deals available and all tailored to suit your personal circumstances.
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