Virgin Money Interest Only Mortgages
What is an interest only mortgage?
An interest only mortgage is a mortgage that only obliges you to repay the interest of the capital each month. This means that the interest only monthly mortgage repayments are some of the lowest on the market.
The capital of an interest only mortgage is repaid at the end of the agreed term.
When to use an interest only mortgage?
If you want to minimise your monthly outgoings, you could take out an interest only mortgage because their monthly repayments are often so low.
In addition, an interest only mortgage could be utilised to remortgage your property. This could be appealing if you want to release the equity in your property.
Alternatively, if your initial mortgage deal is about to expire, you could remortgage on an interest only mortgage to avoid paying your existing lender’s standard variable rate.
Risk of negative equity
When purchasing a property, it is possible for your property’s value to drop below the amount of capital remaining on your mortgage; this is called negative equity.
It is important to note that interest only mortgages increase the chances of falling into negative equity.
The amount of interest
Interest only mortgage payments are smaller than the majority of other mortgage payments.
Despite the low monthly repayments, interest only mortgages often have higher rates of mortgages than regular mortgages. This means that if you take out an interest only mortgage, you will likely pay a higher rate of interest.
Interest only mortgages with high street lenders
Traditional lenders that offer interest only mortgages will all have slightly different requirements, but the majority of them will review the following during the application process:
Affordability: The lenders’ main concern is the affordability of an interest only mortgage. Lenders want make sure you can afford the interest only mortgage payments each month. Lenders will usually require you to have an individual annual income of £50,000 or a joint income of £75,000.
Repayment: Your application for an interest only mortgage will only be successful if you have a clear repayment vehicle strategy in place. A repayment vehicle strategy is the method you intend to use to repay the entire capital of the mortgage.
Loan to value (LTV): Traditional lenders will only provide an interest only mortgage with a certain LTV. The majority of lenders will only provide interest only mortgages up to 75%. If you require higher LTV on your interest only mortgage, it is advisable to contact a broker.
Virgin Money Interest only mortgages
Virgin Money offer an interest only mortgage with competitive rates of interest.
If you want to see the latest Virgin Money interest only mortgage rates, then use our Virgin Money interest only mortgage calculator above. Simply put in your details and borrowing needs to see the best interest only mortgage deals for you.
If you are not sure whether an interest only mortgage is right for you, then speak to our independent mortgage broker team who will be able to offer impartial advice.