Might a flexible interest only mortgage work for you? Deal Direct can help.
Flexible interest only mortgages.
Taking out a flexible interest only mortgage is frequently a popular choice with home buyers as the monthly outgoings can often be far less than repayment mortgages.
A repayment mortgage repays both capital borrowed and the interest whereas an interest only mortgage pays back the interest only and the outstanding capital balance remains the same.
First time buyers trying to get onto the property ladder may find that a flexible interest only mortgage is a suitable choice for them. As lenders are often asking for large deposits and first time buyers can be rather cash strapped the prospect of having their monthly mortgage repayments reduced with an interest only mortgage is often a necessity.
This can ensure that first time buyers who are already coming onto the property ladder at a much later age can afford to purchase their first property.
What's in a flexible mortgage?
The flexible component of the mortgage often allows for underpayments and payment holidays which can be an initial help financially and in addition some flexible mortgages include options of over payments and one off lump some payments which can then reduce the mortgage term.
Lenders who offer a flexible interest only mortgage generally request that borrowers link an endowment policy or ISA to their mortgage as a way of paying off the capital at the end of the mortgage term.
When the endowment matures the borrower is usually able to pay off the capital unless there are any shortfalls. Many lenders allow borrowers to change to repayment mortgages within the flexibility of their products so they can be sure to repay the interest and capital.
