Interest only mortgages
Interest only mortgages are loans against a property where the capital is not repaid, just the interest. Therefore the value of the loan never reduces. Most interest only mortgages do not have a time limit like normal mortgages that are usually repaid over 25 years, but the borrower continues to repay the interest until they are in a position to repay the capital.
In recent years interest only mortgages have become more popular as first time buyers have struggled to afford a repayment mortgage. The thinking behind this is that the property will rise in value and when the homeowner sells the property they can use the profit from the sale to put down a decent deposit and be able to get a repayment mortgage. There is an element of risk in doing this because property values can go down as well as up over the short to medium term.
- Interest only mortgages
- Clydesdale Bank launch interest-only mortgage option
- RBS and NatWest’s new £50,000 rule for interest only mortgages
- Nationwide culls interest-only mortgages unless you have 50% equity
- NatWest and RBS pull out of interest-only mortgage market
- How to manage an interest-only mortgage
- Co-op quits interest-only mortgage market for new customers
- The Co-op unveils interest only mortgage advice campaign
- Boom time for interest-only mortgages?
- 1.3m interest only mortgages with no way to pay off