Interest Only MortgageChoose Interest-only for Low Monthly Payments

An interest-only mortgage means exactly that, you make an agreement with the mortgage lender that you will borrow a certain amount of money for a certain amount of time, and at the end of this period, you pay back the full amount that you owe. Your monthly payments will only ever be paying interest to the lender (at the pre-agreed rate), and as a result an interest-only mortgage is undoubtedly a cheaper deal in the short-term. The alternative to an interest-only mortgage is known as a repayment mortgage. With this type of mortgage, you are paying interest on an ever-decreasing debt and therefore, the amount that you pay the lender will be less overall. More info

However, an interest-only mortgage deal will be a suitable option if you cannot initially afford monthly repayments, but you do have an investment plan in place that would pay enough to repay the debt at the end of the mortgage term. Think very carefully before taking on an interest-only mortgage deal, because as recent events have shown, you cannot rely on your property alone as an investment. At SimplyFinance, we recommend consulting a qualified mortgage advisor before taking such an important financial decision. Once you have used our tools to compare interest-only and repayment options, simply fill out our short form to be introduced to a suitable, FSA-authorised advisor who can help. Less