Interest-only mortgages are a potential solution for people who receive large bonuses or whose salary is mostly commission-based because monthly payments are kept low. The low monthly payments act as a financial buoy as your cash status peaks and troughs, allowing you to control costs more effectively. The flexibility that this mortgage provides means that they are in high demand.
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However, these mortgages are not as common as standard mortgages, and there is more stringent lending criteria. It’s necessary to justify why this is the most appropriate option, which is why it is particularly fruitful to connect with the right mortgage advisers who have access to the broader market across banks, building societies, private banks, and boutique lenders. CBM Financial Partners take an advisory role and guide you through the process.
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At the end of the mortgage, you will need to pay off the capital loan for the property. If you have a robust financial profile, this type of mortgage may be an option for you from a long-term planning perspective because you are more agile, and it provides you with greater flexibility.
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While every lender’s terms vary, a typical term for an interest-only mortgage could be as little as 2 years and up to a maximum of 25 years. As we mentioned above, the only monthly repayment you will have is the interest rate, which can be fixed or variable. How long you intend to take the mortgage out for will affect the rate at which interest is charged.
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Low rates are not necessarily the key driver for every personal circumstance. At CBM Financial Partners, we ensure that borrowers clearly understand the monthly payments they will need to make. We uncover and highlight any potential unforeseen costs, such as a clause that could prevent you from paying back capital before the end of the mortgage term.