|
Home / Others
What is an Interest Only Mortgage
By:Jeff Lakie
The CML (Council of Mortgage Lenders) show that nearly 6 Million people have received mortgages that are interest only. Interest only mortgages means that your monthly payments are applied only to the interest accrued on the debt and not the actual debt itself. Additionally, the CML has found that many first time home purchasers are seeking interest only mortgages. The number of first time buyers that apply for interest only loans increases each year. Why such a boom in this type of loan? Well research has found that by allowing first time homebuyers to pay interest only, is the only way many of them can afford to buy a home.
An example of how an interest only mortgage works is say a homebuyer wants to borrow £100,000 for three years at a fixed rate of 4.99%. The estimated payment for this person would be about £600 to repay the loan. However, if you make this interest only, their monthly payment would decrease to only around £400. The general problem with this type of mortgage is that the borrowing homeowner would need to have some way of being able to pay on the capital of the loan. Otherwise, at the end of the loan term they will still be left with the same debt.
Years ago, a mortgage lender would require that anyone applying for a loan be able to prove that they would be able to pay their loan. Today, it is simply the matter of reminding the homeowner that they will need to pay off the capital. Typically, it is usually required that those interested in a interest only loan have some sort of investment, for example and ISA (independent savings account) that will go towards the capital when the mortgage terms end.
It is extremely important that you thoroughly consider all your means and put a great deal of thought in how you can pay off the capital of the loan. Many people rely on house prices to rise to help them, with lower wages and falling prices this will not provide a secure environment. This in the end could mean trouble for the homebuyer.
So, by now you are probably wondering what you can do to pay this loan off. You could consider a mortgage of repayment, a portion of every monthly payment you make goes towards the actual debt. This is more expensive than the interest only loans; however, it does help reduce the debt by actually applying payments towards it. If you do have an interest only loan there are a few things you may be able to do. For example, you could have part of your mortgage switched into a repayment mortgage or open an ISA and start saving month every month. This is tax-free and by saving, you will bid up funds to put towards the capital.
Jeff Lakie the creator of the
Secured Loan uk
website. We provide a free service finding uk homeowners
with the best loan.
Digg
del.icio.us
Blink
Stumble
Spurl
Reddit
Netscape
Furl
Article Source: http://www.articles2k.com
|
|
| Top Others Articles |
- 1). Clay Pot Crafts: Make a Bell for the Porch By : Paul Duxbury
Clay pot crafts are a cute way to make home decorations. In clay pot crafts, clay flower pots can be crafted into a variety of decorative things that appeal to gardeners. Usually, the crafter begins with new pots.
|
|
|
|
|
- 4). Biotechnology And Immortality By : frank vanderlugt
In a very primitive way we are on the road to Immortality.
Within the nucleus of nearly every one of the 100 trillion cells that make up our body is a Computer Program of enormous complexity. This Computer Program is our DNA.
We can now for the first time in Man's history read the message this Computer Program produces.
|
|
|
|
|
|
|
|
|
|
|
- 10). Treadmill Vs Elliptical By : Kathryn ONeill
Should you buy an elliptical trainer or a treadmill? Discover the unique benefits of both elliptical trainers and treadmills to help decide which one is best for you.
|
| New Others Articles |
- 1). Psychic Ability - Fraud Or Gift? By : Ciara McGrath
A psychic has some special powers that ordinary people don’t have. Some psychics are able to predict the future, others can communicate with the recently deceased. Some psychics are telepathic, others have the ability to exorcise ghosts.
The police use psychics to help solve crimes, preferably without the media getting to know! The newspapers would have a field day mocking the police investigator who had to resort to a “fortune teller”
Many people secretly believe that ...
|
- 2). Native Speakers? By : Brenda Townsend Hall
In a recent poll, I asked readers if they thought English language teachers should be native speakers. The result was interesting, as the vote from those with an opinion was close with 48% believing they should be native speakers and 41% saying no. I don’t know what you think about this but I’ve always had mixed feelings.
The first question I would raise with those who believe being a native speaker is an essential prerequisite for an English language teacher is, which nat...
|
- 3). Don't Hesitate To Cry A Tear By : Hallidae Thomason
Growing up, my siblings and I were never aloud to cry even just one tear. No matter how sad, mad or hurt we were, tears were never allowed. We were told that truly tough people didn't shed a tear no matter how bad life got. Tears, our parents said, were for wimps and people who weren't strong enough to handle life.
As I grew into my teenage years, I found it nearly impossible to make it through week after week without crying a single tear. Since I knew my parents would not...
|
- 4). I Heard About A Shark Attack By : Hallidae Thomason
Ever since my children were little, my husband and I have been taking them on beach vacations. So my kids have grown up with an honest love of the ocean. Even my youngest child loves to run by the side of the ocean and to wake up to the sound of the waves. My own childhood was filled with various beach vacations and cruises on the ocean. I have never given safety much of a thought on our family's beach vacations, but last year we heard a story about a shark attack that had ha...
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
