Interest Only Mortgages
With an interest only mortgage, your monthly payments to the lender cover only the interest element of the loan (i.e. you don't pay back any of the capital). The full amount of the loan has to be repaid to the lender at the end of the term. To do this you invest additional funds on a monthly basis which are set at a certain growth rate to repay the loan at the end of the term. Plus Points: You can choose a variety of investment vehicles such as Endowments (which usually has built in life cover), ISAs (Individual Savings Account) or a Pension for which some have great tax advantages. If you should remortgage or move, your investments can generally be reallocated to the new mortgage along with your reducing mortgage term. Points to Watch: Unlike a repayment mortgage, the amount of debt does not reduce over time. And there is no guarantee that your chosen investments will grow sufficiently to repay the loan. However you can top up your investments as you are going along if this looks likely to be the case.
Below are the leading interest only mortgage companies. We strongly recommend that you obtain quotes from several companies. It always pays to shop around!
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