An interest-only mortgage allows you to pay only the interest on the loan for a specified period, usually the first few years of the mortgage term. This means your monthly payments are lower during the interest-only period because you’re not paying off the principal loan amount. Here are the key features and benefits of interest-only mortgages:
With a variable rate mortgage, your payments could increase if interest rates rise, but you also have the opportunity to benefit from reduced rates if interest rates fall. This option is suitable for borrowers who are comfortable with some level of financial risk and can potentially take advantage of lower interest rates.
This period typically lasts for a set number of years at the beginning of the mortgage term, after which the mortgage usually switches to a repayment basis, where you start paying off both the principal and the interest.
It’s essential to have a repayment plan in place to pay off the principal balance when the interest-only period ends. This can be through savings, investments, or switching to a different mortgage product.
The lower initial payments can free up funds for other uses, such as investing, home improvements, or paying off other debts.
The lower monthly payments during the interest-only period can make homeownership more affordable in the short term, especially for those with fluctuating incomes or other financial commitments.
If you have investments that you expect to grow over time, the lower initial.
Find the right mortgage for your needs with clear, personalised guidance from Pera Mortgages.
As UK-based mortgage brokers, we understand the complexities of the market. Let our seasoned experts steer you through the maze of options, ensuring a seamless experience tailored to your needs.
As UK-based mortgage brokers, we understand the complexities of the market. Let our seasoned experts steer you through the maze of options, ensuring a seamless experience tailored to your needs.
