What is an Interest only mortgage?
This type of mortgage means that you only pay the interest charged on your loan, so although you will pay off interest each month, the amount you borrow does not reduce over time.
The advantage of this type of mortgage is that the monthly mortgage payment is lower than on a full repayment mortgage. However you still have a debt to pay at the end of the mortgage term. Usually, you would have another repayment vehicle to pay off the mortgage at the end of the term. Lenders will want to see proof of these and approve them.
These mortgages are now only offered with very strict criteria and aren’t available to everyone. Another advantage of an interest only mortgage is that if the savings or investment plan you choose performs well, then you could pay off your mortgage earlier, compared to a repayment mortgage, or have a lump sum available after the mortgage has been paid.
The disadvantage is that very few investments are guaranteed to repay your mortgage in full. If your savings or investment plan doesn’t cover the full amount, you’ll be responsible for paying the difference.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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Our Fees
We don’t charge for our advice. Instead, we charge a fee for processing your mortgage application.
Typically we charge a lifetime fee of £750, or alternatively a fee of £500 per application. We are able to charge a fee up to 1% of the loan size – however this would normally be in exceptional circumstances (for example adverse lending, or where there is additional or exceptional work to process the application.
This fee is payable at the time of application.
The total fee will be based on your personal circumstances, employment record and credit history.
We will provide you with written confirmation of your fee prior to the commencement of a chargeable activity. We will also receive commission from the lender”.