Interest Only Mortgages – A Good Viable Option

Hunting for a home? Apprehensive about the huge mortgage payment that it would involve? Do not worry. The answer to your problems is an interest only mortgage. Not many people are aware of interest only mortgages and the benefits they offer. Some useful information regarding interest only mortgages are available blow so that you could make the right decision and enjoy your beautiful home.

Interest Only Mortgage

An interest only mortgage provides you the convenience of paying only the interest on the loan. It does not involve repayment of the capital and thus is a huge saving on the overall cost incurred by you on the mortgage payments. In this type of an agreement, the capital is repaid in full at the end of the term. This provides you not only time for repayment of capital but also the regular payments work out lower and would thus cause less tensions and stress as regards money management.

Interest Only Mortgages

Capital Repayment

The capital is not repaid in your regular monthly payments. An investment fund is created into which you make payments of small amounts or lumpsum. You make payments into the fund on a regular basis so you don’t really feel the pinch and the capital repayment is also catered for. You can also change over to a repayment mortgage and also by means of a lumpsum payment.

Benefits

The interest only mortgage provides you a number of benefits that would actually make the mortgage repayments not an issue at all and ease your stress and tension on that count.

The regular repayments on capital can be made into the investment fund created, thus you would be repaying capital but this method would involve a lower overall cost as compared to a regular mortgage repayment.
The interest only repayment would help lower the financial burden and therefore, if making big payments is not possible at present, then the interest only mortgage is your best choice.
The money you have been depositing towards capital repayment in the investment fund would probably leave you with some extra funds after full capital repayment at the end of the term. Therefore, the interest only mortgage provides you with a dual advantage.
The Other Side

Although the interest only mortgage provides you the facility of lower repayment amounts on a monthly basis, the total amount that you would be paying towards mortgage repayment would be much higher as compared to a regular mortgage repayment.
In case the payments into the investment fund are not enough at the end of the term for repaying the capital, then it would be a big risk because if you are unable to repay the whole amount it would result in you losing the house.
An interest only mortgage can be a great option for the present only thing you must ensure is that in case you fall short of funds in your investment fund account for repayment of capital then you should be able to make some arrangement at that time so that you are not in a crisis situation ending up losing your home.

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