Interest Only Mortgages
First of all, it is 2018, and interest only mortgages have dropped by almost half since 2012.
UK Finance have revealed figures that state these types of mortgages have fallen by 46% since 2012.
According to Property Investor Today, “Currently there are 1.7 million outstanding interest-only mortgages (including partial interest-only)…”
“…Loans at these higher loan-to-value ratios now account for 13% of the total, in comparison to 16% in 2016 and 36% six years ago.”
They also state, “In separate UK Finance research, it was also revealed that of the one million interest-only loans set to mature by 2020 that were live at the end of 2012, there are now only approximately 200,000 that remain.”
As a result, these figures show that many borrowers resolve their mortgage payments ahead of schedule or switch to a repayment mortgage.
Especially relevant, if you do not understand the terms within the article, here is a link to Keystone IMC Ltd website.
This link will help you to better understand mortgage related terms and phrases with thier glossary of mortgage terms.
Interest Only Mortgages Explained
Borrower – person taking mortgage to buy a property
An “Interest Only Mortgage” is a mortgage where the borrower pays only the interest rate of the mortgage and not the full repayment.
The advantage of is that it can help the borrower reduce their financial outgoings.
The borrower only pays the interest on the mortgage through monthly payments for a term that is fixed on an interest only mortgage loan.
The disadvantage is that the borrower will have to pay a lump sum of the repayment amount after the payment term.
Most noteworthy, if provisions for paying this accumulated amount is not in place after the term is over:
1.) Some make a lump sum payment
2.) Some refinance/re-mortgage their homes
3.) Some begin paying off the principal of the loan.
The principal of the loan is the money that you originally agreed to pay back.
So, for those who do not understand mortgages, we hope this post has helped
Furthermore, if you might find it hard to make the repayments, the interest only option may help you.
In addition, if you can afford the full mortgage repayment, you may want to choose that option.
As a result, this will help you to avoid amounting and considerable payments owed in the future.
Conclusion of Interest Only Mortgages
In conclusion, it is important to understand interest only mortgages and your mortgage options.
Most of all, check back in the future to read more about mortgages and other property related posts.