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About Interest Only Mortgages
The interest only mortgage is now one of the most popular mortgages available in today's mortgage marketplace. Favoured by the young first time buyers that are now a large proportion of the market, the interest only mortgage is viewed as a mortgage for the short term.
- Interest Only Mortgage Benefits
- The interest only mortgage is unique in that the customer does not actually repay the mortgage. Rather, an interest only mortgage allows the customer to repay just the interest on the initial mortgage capital. Because you are only paying back the interest and none of the capital you will make some significant savings. The interest only mortgage is used by many property investors who want to sell the property on as quick as possible for as much as possible, while paying the least they can for the mortgage.
- Interest Only Mortgage Cons
- The biggest drawback of the interest only mortgage is the fact that you only py back the interest on the initial capital - you do not pay back any of the initial loan. It can be very easy for you to fall into the tarp of just paying back the interest for many years before realizng that the entire initial capital is still outstanding. It is advised that if you are taking out an interest only mortgage that you have investments and savings in place that can pay off the mortgage at the end of the term.
- Notes On Variable And Fixed Rates
- Interest only mortgages are available at a variable rate where it tracks the interest set by the bank. However, interest only mortgages are also available with a fixed interest rate, so that you can plan ahead financially. If you have chosen the variable interest only mortgage you should be aware that your interest rate can do up and down depending on the bank.
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