Interest Only Mortgages
For many people, interest only mortgages are called 'endowment mortgages' or even 'pension mortgages', but strictly speaking these names describe an interest only mortgage plus the method by which it is repaid. In other words, an endowment mortgage is an interest only loan that is repaid by the proceeds of an endowment policy etc.
Interest only mortgages are a type of mortgage where only the interest is repaid. The full capital amount remains outstanding during the mortgage term and is repaid in one lump sum at the end of the term, Lenders require evidence that a customer will have in place a clear credible repayment strategy and that the repayment strategy has the potential to repay the capital borrowed.
Repayment strategies may include deposits or investment product(s), pension(s), periodic repayment of capital from irregular sources of income (i.e. bonuses), the sale of another property or other land or other acceptable methods which meet lending criteria.
This means that the mortgage payments each month will be lower than those of a repayment mortgage for a similar loan and term. Where the repayment of capital is an investment the investment runs alongside the mortgage but is separate from it; the cost should be taken into account when calculating the overall costs of the mortgage arrangement.
Every month, you then pay this interest to the lender for the duration of the loan. The lender calculates your monthly repayments depending upon how the rate you have chosen is set. The monthly interest payments may vary dependent on whether the interest rate is fixed or variable. At the end of the loan period, the lender will expect the initial capital they lend you to be repaid in full by whatever means you have arranged.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
The levels and bases of taxation and UK interest rates are subject to change.
The guidance contained within this website is subject to the UK regulatory regime & is therefore primarily targeted at consumers based in the UK.
Square Financial Ltd is an appointed representative of TenetLime Limited, which is authorised and regulated by the Financial Conduct Authority. TenetLime Limited is entered on the Financial Services register (www.fca.org.uk/register) under reference 311266.
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We provide advice to both individuals and companies on certain aspects of financial planning, through a long term approach of fully understanding our clients' needs, wants and aspirations and then prioritising objectives. As advisers, we can help you arrange suitable contracts to suit your requirements. We have many years of experience in finding the most suitable solution for our clients' needs.
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Following your initial review, we will take time to consider your situation, needs and priorities before writing a financial report. We will discuss this in a follow up meeting, or call, in which we'll fully explain our recommendations and agree affordable priorities to assist you in acheiving your objectives.
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We work with many different companies throughout the UK. Some may be your local branch and others are National companies
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Whether you are first time buyer, looking to re-mortgage or are even up & down-sizing, we have experienced mortgage advisors on hand to help you make the right decision.
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The guidance provided within this website...
...is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK. The levels and bases of taxation and UK interest rates are subject to change. Square Financial Ltd is an appointed representative of TenetLime Limited, which is authorised and regulated by the Financial Conduct Authority. TenetLime Limited is entered on the Financial Services register (www.fca.org.uk/register) under reference 311266