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Mortgage & Equity Release - Call Us 0117 403 4474

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Moving to an Interest Only Mortgage

Our Mortgage Service - Switching to interest only

Why choose our service?

Fair Mortgages can provide you with a first class mortgage service. 

Special features of what we offer include:

  • Whole of market service - we cover most UK lenders
  • Great Rates - Access to leading market rates
  • Exclusive Deals - Access to exclusive remortgage deals not available on high street
  • Fast turnaround - call us if you need to move fast!
  • Less than perfect credit history? - We have lenders who will take into account previous defaults and missed payments 
  • Raising additional finance - If you are looking to raise finance we will look at all your finance options as well as remortgaging.

To investigate your mortgage options call our specialist team on 0117 403 4474 or fill in our call back form. 

Right Bullets

Compare Interest Only Mortgage Deals

An interest only mortgage could be a good option for you if you want lower monthly mortgage repayments, and are prepared to take on the responsibly of making sure that you can repay the mortgage amount in full at the end of the mortgage term.

Interest only mortgages deals – the potential benefits

Most home buyers are more familiar with repayment mortgages – that is, a mortgage in which each monthly repayment is made up of a proportion of both the interest owed on the mortgage and the mortgage capital itself.

The advantage of this type of mortgage is that once the mortgage term is over, the mortgage will have been repaid in full. However, some mortgage holders prefer the benefit of lower monthly repayments that come with an interest only mortgage deal. An interest only mortgage means that you only need to repay the interest owed on the mortgage each month, rather than any of the mortgage capital itself.

Interest only mortgages – the potential downsides

Although an interest only mortgage can be an appealing choice for some home owners, it may not be the right mortgage choice for everyone. The main issue to be aware of when thinking of moving to an interest only mortgage is the need for a clear, well-planned repayment vehicle with which to pay off your mortgage capital at the end of the term.

Many interest only mortgage borrowers use a savings or investment plan to repay their interest only mortgage at the end of the term. Some of the repayment vehicles that are commonly used to repay interest only mortgages include:

  • ISAs
  • Unit trusts
  • Investment bonds
  • Pensions
  • Shares
  • Other properties or assets which could be sold to repay the mortgage

Your ability to move to an interest only mortgage deal will also depend on the size of the mortgage that you want to move. Interest only mortgages are usually only available where the equity or loan to value (LTV) is under 75%. What’s more, since the introduction of stricter lending criteria last year, some mortgage lenders are only offering interest only mortgage at 50% equity.

Planning ahead

If you do take out an interest only mortgage deal it is important to regularly review your mortgage repayment plan to make sure it is performing as expected. If this is not the case, some mortgage lenders will allow you to switch back to a repayment mortgage or a part-repayment, part-interest mortgage deal to help you pay off the mortgage. You could also move or add to your investment plan, or use other cash sources as a lump sum to reduce the mortgage capital.

Moving your mortgage

If you want to remortgage from a repayment mortgage to an interest only mortgage deal, the first thing to do is to make sure that you target lenders who provide interest only mortgages. Not all mortgage lenders offer this type of mortgage deal and repayment mortgages are definitely easier to find at the moment, so you may need to look around to find the right interest only mortgage deal for you. 

Speak to our specialist team on 0117 403 4474 to help you find the right mortgage option for you on an interest only basis or request a callback.