Interest Only Mortgages
Are you looking to take out an interest only mortgage or to replace an existing interest only mortgage that is coming to an end?
Many lenders are making it virtually impossible for you to take out an interest only mortgage and either do not offer them at all or will not offer them beyond age 65. In addition they expect you to have a minimum amount of equity in the property or a traditional repayment vehicle such as an ISA or endowment.
We have high street building societies and specialist lenders who will take a more flexible approach to interest only mortgages.
There are various lenders that will still consider interest only mortgages, however all will have qualifying criteria.
If the intended method of repayment is that you plan to downsize in the future without the need for a mortgage, then the amount of equity in the property would have to be realistic for you to do so.
Lenders might also allow part of the mortgage to be on a capital repayment basis to increase future equity available for downsizing.
Some lenders insist on a minimum amount of equity such as £100,000 or 50% of the property value.
You may be looking for an interest only mortgage with NO end date but either wish to pay the interest monthly or make optional penalty free payments each year. For further information click here.
How Might You Repay An Interest Only Mortgage?
Maybe you have sufficient equity in your property to enable you to downsize and purchase a suitable home in the future without the need for a mortgage? The minimum equity acceptable for this method will depend on where you plan to buy in the UK.
You may be due a substantial future inheritance that would enable you to repay any loan or wish to repay the loan by making ad hoc lump sum payments.
You may wish to switch to some type of Equity Release or Lifetime Mortgage product in the future.
You may have savings and investments that would enable you to clear the interest only mortgage at a future date within the mortgage term or possibly you are due a tax free lump sum from your pension scheme?
You may own other properties either in the UK or abroad that you plan to sell in the future that would provide sufficient funds to clear an interest only mortgage.
Interest Only mortgages can be available up to 75% of the property value.
To discuss your personal situation in more detail or to obtain a written illustration with no obligation, please call us on 0800 542 1719 (it's a free call from UK landlines)