Interest Only Mortgages

You pay just interest to the mortgage lender and pay into a separate investment or pension to build up a fund to repay the mortgage at the end of the mortgage term.  There are three main repayment vehicles which are used, ISA, Endowment and Pension.

Richard says:
This is an option for the more adventurous. The hope here is that the investment or pension grows at a good rate over the term allowing you to either repay your mortgage early or have a lump sum over the mortgage amount to do with as you please.

The advantages of this strategy is you would benefit from investment gains, as the repayment vehicle is not linked specifically to any property so continues unabated no matter how many times you move. The downsides to this include that old saying that investments can go down as well as up. It’s all very well planning the Caribbean holiday pay for by the extra amount you may get once your investment matures and you have paid the mortgage off, but remember that the opposite could be the case and you have a shortfall with not enough money to repay your mortgage.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE