|
|
|
|
|
Repayment or Interest Only Mortgages - Most mortgages can either be repaid by a repayment mortgage where the mortgage interest and capital are paid off each month. Interest only mortgages only pay the interest off the mortgage or a combination can be used as a repayment and interest-only mortgage.
If the assurance that the mortgage will be paid off when the mortgage ends a repayment product is necessary. If an interest only mortgage is chosen it is essential you will have the means to pay the capital off at the end of the mortgage term. This will require the borrower to have ISA’s or endowment policy or be willing to sell up but £150,000 of equity will be needed for around a 66% loan of the property value. If a second home is to be sold the property must be 120% or more of the new mortgage amount.
It should also be mentioned that there are no guarantees that any type of mortgage will be repaid by the end of term. Repayment by some other method will be needed to pay off the shortfall.
|
|
|
