Interest Only Mortgages

Interest Only Mortgages

With this type of mortgage you are only paying interest each month. This means that although your payments will be lower, the amount you borrow will still be outstanding at the end of the mortgage term. You’ll need to make alternative arrangements to pay off the mortgage to avoid the property having to be sold, such as the following:

• Sale of a mortgaged property, this must have enough equity to support purchasing a new property, for instance, if you are buying for £250,000 and you take out a £225,000 mortgage you will only have effectively £25,000 to buy a new property. Invariably you will require at least £250,000 in equity to enable you to downsize. You will normally need a higher income £40000.00+ to qualify.
• Using your pension tax free lump sum but you will need to prove the anticipated amount that this will be.
• Sale of another property, there must be enough equity in this property to clear the balance of your residential mortgage.

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