What is an interest only mortgage?
Interest only mortgages are those that only oblige you to pay the interest of the mortgage each month, and pay the entire capital of the mortgage at the end of the mortgage term. They have some of the lowest mortgage repayments on the market.
Although the size of the mortgage payments is often small, the interest rates on interest only mortgages are often high.
Also, it should be noted that interest only mortgages expose you to a greater risk of negative equity. This is because the mortgage payments do not go towards repaying the capital of the mortgage.
You can access an interest only mortgage through Halifax. You can view all the available interest only mortgage deals through our Halifax. interest only mortgage calculator at the top of the page.
Why do people Choose an interest only mortgage?
The main reason is to keep monthly costs to a minimum.
1. Has your initial mortgage deal come to an end?
By switching to a better deal with a different mortgage provider, an interest only mortgage could potentially allow you to benefit from lower interest rates and lower monthly mortgage repayments.
2. Are you looking to raise money?
By remortgaging you may be able to releasing equity in your home.
People often remortgage to provide money for:
- Home improvements
- New Kitchen
- New En-suite bathroom
- Consolidate other existing debts.
3. Borrowing in retirement interest only
Free up funds from your home so you can live the life you want to.
A number of lenders provide interest only mortgage options which allows you to borrow on an interest only basis after retirement.
Independent Mortgage Advice
Remortgaging is particularly popular at the moment as interest rates are low.
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Whether it will be a good idea for you to remortgage depends on a number of factors, including your goals and your personal circumstances.
However, in general, if interest rates are lower than you are currently paying on your mortgage, it may be a good time to remortgage.
If interest rate are higher than you are currently paying, it may be better to look at other options, such as a second mortgage or a personal loan (if you aim is to borrow more).
If you are not sure whether now is the right time to remortgage, it is a good idea to speak to an independent mortgage broker who will be able to offer impartial advice on Halifax & alternative lender options.