Interest Only Mortgages
An Interest Only mortgage is, as it sounds, one where you are only paying the interest being charged on the loan, you are not paying back any of the capital that you have borrowed.
If you carried on paying a mortgage on an interest only basis for the whole mortgage term, eg 25years, at the end of the 25year term you would still owe the full amount you had borrowed originally.
However lots of people take out interest only mortgages these days as these best meet their requirements in the short term - people want to get on the housing ladder or live in a property that is suitable for their family needs and an interest only mortgage provides the cheapest way of doing this.
Many people take out a savings plan to run alongside an interest only mortgage, such as an ISA, or intend to use their Pension lump sum payment to pay off the capital that is borrowed. All savings plans of this nature need to be monitored regularly to make sure they are on track to achieve the desired amounts in the necessary timeframes.
A lot of people also begin their mortgage life on an interest only basis, knowing they will switch to a repayment based mortgage as soon as it is affordable to do so.
Interest only mortgages from the Halifax, for example, start from as low as 5.39%. (correct on 13 March 2008)
Areas covered include: Wetherby, Tadcaster, Boston Spa, Collingham, Kirk Deighton, Leeds, Harrogate, York...
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