Interest Only Mortgage

The interest only mortgage is one of the more intriguing types of mortgage out there at the moment and one that has received little coverage since the 1980s. Until now, that is! They were popular in the 1980s because they accompanied endowment policies. Although the endowment has rapidly declined in popularity as a direct result of many of them not reaching their targets and failing to pay off outstanding mortgages as a result. However, the interest only mortgage is making a comeback at the moment because they make life that little bit easier!

The interest only mortgage is actually coupled with some sort of savings plan that is tailored to suit you. It may be coupled with an ISA or similar plan, which you pay into every month. This plan will grow during the term of your mortgage and is specifically targeted to pay off the total sum of your mortgage at the end of the term. In the meantime, you pay off the interest that is added to your mortgage every month so that the total amount you owe remains at the same level as your initial borrowing.

The beauty of the interest only mortgage is that you keep your mortgage payments to a minimum and can make your savings plan work for you. This means that you can purposely target an amount over and above the sum needed to pay off the loan after 25 years so that you have a little left over for a holiday, home improvements or retirement. You have a degree of control that is not often present in most other types of mortgage. Many providers offer it so it is definitely worth considering. You never know, the interest payments and savings plan may be just the refreshing change you need to ensure your home’s security and your peace of mind!