Interest Only Mortgages
An Interest Only Mortgage is one whereby your monthly payments consist solely of interest and not any capital repayment element. Therefore the balance size of your mortgage will remain the same, and not be reduced at all as time goes on.
Interest only mortgages should be supported by a repayment vehicle, so that the mortgage can be payed off at the end of the full term. It can be useful for people purchasing a new property to pay interest only over an initial period, to keep their repayments low whilst setting up home. It is then relatively easy, quick and cost free to switch on to a repayment option when the time is right. Another popular use of an interest only mortgage is for Buy To Let or investment properties i.e. any property that is bought with the intention of selling it on for capital gain within the short to medium term.
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