Should I get an interest only mortgage?
Friday 27 October, 2023
If you’re about to come off a fixed rate mortgage, then you could be forgiven for wondering what’s in store for you.
Until relatively recently, interest rates have been at near-historic lows for over a decade. In the last two years, though, they’ve rocketed. Higher interest rates, coupled with the cost-of-living crisis and high inflation levels not seen in almost 40 years, has created uncertainty for those whose fixed-rate deal is about to end.
Homeowners are keen to keep their repayments manageable and one option you may be considering is an interest only mortgage.
What is an interest only mortgage?
An interest only mortgage means you only pay the interest each month, with the loan amount remaining the same. This means your mortgage payments could be cheaper on a monthly basis. But at the end of the term, the full amount you borrowed needs to be fully repaid.
Is an interest only mortgage the right option for you?
Any mortgage decision needs to be carefully considered, which is why we are on hand to provide you with the expert advice you need to make an informed choice. A lot will depend on your circumstances. Interest only mortgages can cut the cost of your monthly payments but you will need a credible repayment plan at the end of the term.
Maybe you have a separate investment vehicle to pay off the debt, or perhaps you’ve built up significant equity in your property and plan on down-sizing at the end of your mortgage term. If that’s the case, then an interest-only mortgage could be an avenue that we can explore together.
What are the drawbacks of an interest only mortgage?
The interest-only option isn’t for everyone and can be a route that is, ultimately, more expensive than remaining on a repayment mortgage. There’s also a chance that the investment you have in place to pay off the debt doesn’t work out – leaving you unable to afford the lump sum at the end of the term.
We’re on hand to guide you through…
Marian Isciuc, our Mortgage Broker in Harlow said
“With its cheaper monthly payments, an interest only mortgage, can be an effective way to keep your costs down and, in the immediate term, feel like an attractive option but you have to be certain you will be able to repay the loan when it comes to the end of the term.
Our experienced advisers will talk you through all the pros and cons of an interest-only mortgage, assess all your options and help you make the right choice for you and your individual circumstances.”
Call our Mortgage Advisers on 01707 872 000 or drop them an email on enquiries@thomasoliveruk.co.uk.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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