Mortgages

Interest Only Mortgage

Your repayment is based on the interest of the loan only and the outstanding amount is not repaid until the end of the term of the mortgage.

Monthly repayments normally consist of Interest on the amount borrowed, Life Assurance and Contribution to an Investment Plan (an Endowment or similar) which is designed (although not guaranteed) to pay off the outstanding capital at the end of the mortgage term.

Traditionally, monthly payments on Interest only mortgages are lower than a repayment mortgage but you also have to consider the cost of the Investment Plan in your monthly payments.

NB: As noted earlier, the risk with this type of mortgage is that there is no guarantee that the Investment Plan you choose will yield adequate capital to enable you to pay off the outstanding debt at the end of the mortgage term.

It must be noted that YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.