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What are Interest Only Mortgages?

Repayment Mortgages vs Interest Only Mortgages

Why Choose an Interest Only Mortgage?

How Can Friends Capital Help?

Interest Only Mortgage

An interest only mortgage allows you to pay just the interest on your mortgage per month, for the term of your mortgage. You don’t have to repay the amount you’ve borrowed until the end of the mortgage term.

Interest only mortgages are complex, and are challenging to secure. Our mortgage advisers are experts in interest only mortgages, and can offer sound and unbiased advice on how to get the best mortgage deal possible. We will also give advise on other property investments you may wish to conduct with your additional cash.

We will review your personal circumstances and then search the entire market to ensure you get the best mortgage deal possible. We will then deal with all the paperwork, submit your mortgage application, liaise with your mortgage lender and solicitor, and ensure that your mortgage application is completed as quickly as possible. We can: 

  • Save you money on your mortgage deal 
  • Offer a free consultation 
  • Offer unbiased financial advice 
  • Save you time in your mortgage application 

Give you a dedicated account manager who is available to you through the process.

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What are Interest Only Mortgages?

With an interest only mortgage, you only cover the interest element of your mortgage and don`t reduce the capital you borrowed initially. This means your payments will be less than a normal mortgage, but at the end of the term you’ll still owe the original amount you borrowed from the lender. You must provide your lender with substantial proof that you are able to repay  the  mortgage outstanding  at the end of the mortgage term. 

Repayment Mortgages vs Interest Only Mortgages

Interest only mortgages differ from typical repayment mortgages. With Repayment mortgages, you gradually repay the money you’ve borrowed on the full mortgage amount throughout the agreed mortgage term. With repayment mortgages you make one payment a month to your lender, part of which goes towards repayment of the actual loan, and the rest covers the interest. This means your monthly payments are higher than that of an interest-only.

With interest only mortgages, you’re only paying the mortgage interest per month, so your payments can be  far lower than a repayment mortgage. However, this means you will need to make other arrangements for paying back the full capital at the end of the mortgage term. You can either mean paying a separate monthly sum into another investment, or using another asset / investment that already has a value that would cover the loan.

You will need proof of a legitimate repayment plan to pay off your mortgage at the end of the mortgage term. Acceptable repayment plans vary by lender, and may include:

  • Savings in ISAs
  • Stock market investments
  • The sale of a property
  • Remortgaging

Why Choose an Interest Only Mortgage?

Lower monthly payments –  You are only paying back the interest on your loan per month for the term of the mortgage.

Control Over Investment – You have the ability to decide how you repay the capital of your mortgage after the period is up.

Potential to Profit – You can use the additional cash saved to put towards home improvements, property developments or gain more equity in the property.

How Can Friends Capital Help?

Friends Capital have pre-existing relationships with lenders that welcome interest only mortgages. We can search the entire market and get access to the best and most exclusive deals available. Then we will choose the deal that are most appropriate to your personal circumstance. We can:

  • Find you a lender that offers interest only mortgages
  • Find you a deal appropriate to your personal circumstance
  • Offer unbiased financial advice
  • Give advice on what mortgage lenders will require, including giving you advice on an exit strategy for the mortgage end
  • Give you a no obligation mortgage quote
  • Deal with all the paper work, liaise with the lenders and solicitors. We will also make sure the application goes through as quickly as possible

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Two Steps to Contacting Friends Capital 

Step 1 

Either call us, email us , book an appointment online or request a call back below.

Step 2 

One of our friendly advisors will either call you back within 24 hours (usually the same working day), or will take details from you in order to best deal with your situation. 

When you speak with us, we will take a ‘fact find’. At this stage we take basic details about your situation. We will then search the whole of the market and find you the best deal available. 

If you are happy with the deal that we offer, we will then contact the lender for you and get you what is called a ‘decision in principal’. 

If you’re happy with the decision in principal then we will secure this deal for you and deal with the application for you on your behalf. 

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