Interest Only mortgage
With this type of mortgage only interest
is paid to the lender therefore the amount owed on the mortgage
remains the same. Interest-only mortgages usually have lower
monthly payments than a repayment mortgage but are inherently
more risky.
Usually an investment plan is linked
to the mortgage such as an ISA or endowment policy which aims
to repay the mortgage at the end of the term. There is no
guarantee that the investment plan you choose will generate
sufficient capital to pay off the outstanding debt at the
end of the mortgage term. The plan usually has built in life
cover and is portable from one house to the next.
Some lenders do allow you to
have an interest only mortgage without a savings vehicle attached
but it is always your responsibility to ensure that there
is sufficient means to repay the mortgage at the end of the
term.
Your home may be repossessed
if you do not keep up repayments on your mortgage.
Details
of our fees can be found here.
The FSA does not regulate Commercial
Mortgages or some forms of Buy to Let Mortgages.
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