Interest Only

How does it work?

Your monthly payments represent only the interest due to the lender, and do not include repayment of capital. Your total loan must be repaid at the end of the mortgage term. You therefore need to arrange additional investments which will generate sufficient capital to repay the loan.

ADVANTAGES:

1. You can choose from a variety of investments, some of which have tax advantages.
2. Should you move or arrange a remortgage, your investment can usually be reallocated to the new mortgage.

DISADVANTAGES:

1. Unlike a repayment mortgage, the amount of debt outstanding does not reduce over time
2. There is no guarantee that the investments chosen will grow sufficiently to repay your loan.

Your home may be repossessed if you do not keep up repayments on your mortgage.

We can be paid by commission from the lender or a fee of 0.75% of the loan amount (e.g. for a loan of £100,000 the fee would be £750). We will refund to you any commission we receive from the mortgage lender. You will receive a Key Facts illustration which will tell you about any fees relating to a particular mortgage.