As the name suggests with an interest only mortgage you are only paying off the interest on the loan. None of the payment goes towards the capital which remains unpaid.

Typically, interest only mortgages run alongside an investment, such as an ISA, Pension or Endowment. The idea being that the investment is used to pay off the mortgage at the end of its term or even provide a surplus.

The danger with this type of mortgage is that if the investment does not achieve an adequate return then you could still be left with an outstanding balance at the end of the mortgage term, putting your home at risk.

Some lenders will require proof of the investment vehicle, others will not or may accept other repayment methods, such as from property investment or from the future sale of a private business.

If you take an interest only mortgage it is your responsibility to ensure your plans to repay the capital are adequate and you should review the performance of your investments on a regular basis to ensure that they are adequate.

Please check out some Interest Only Mortgage options by visiting our Mortgage Tools or contact us for advice on interest only mortgages.

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

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK

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Registered Office: 4 Copthorne Road, Rickmansworth, Herts, WD3 4AE, England. Tel: 0800 023 1020
Company Registration Number: 5183369
Email: enquiries@igloo.co.uk
Principal: Richard Tanner

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