Mortgage & Refinancing Information

Luxury Real Estate Information

Rancho Palos Verdes, California Homes
Palos Verdes, California Homes
South Bay, California Homes
Luxury Mexican Beachfront Homes

Featured Properties

Oceanfront Estate Near Trump National

Related Information

Loan Information
Real Estate Information
Mortgage Refinance Information

What is an Interest Only Mortgage?

An Interest Only Mortgage is one where the repayments are made up entirely of the interest on the loan. When the mortgage term is complete, the capital originally borrowed is still outstanding.

To cover the balance, borrowers are advised to make regular contributions into an investment policy alongside their mortgage repayments. This can be arranged by the mortgage provider, most commonly in the form of an endowment mortgage, an ISA mortgage or a pension mortgage.

With this type of mortgage, the mortgage lender is advancing you money and asking you to do no more than pay the interest each month. In other words you are merely servicing the debt, and the amount outstanding on your mortgage will remain constant.

An interest only mortgage can be an excellent choice for some borrowers, who have a valid use for a lower initial required payment. The actual capital which is freed up to pay for your property can be invested into a long term investment fund, which, if invested carefully, ought to help pay off both your mortgage earlier than expected, and may even be used to cover the cost of your interest only mortgage payments.

With interest only mortgages, most borrowers take out some kind of savings plan to ensure that at some time in the future they will have enough money to pay off their mortgage and have the satisfaction of knowing that the bricks and mortar belong to them.

With an interest only mortgage, a borrower will invariably take out an endowment policy, a pension, or an ISA. In addition, it is always good practice to arrange adequate life cover to ensure that should the mortgage payer die the loan will be repaid in full.

With a repayment mortgage, you make monthly payments on the borrowed capital as well as the interest. With interest-only, however, your payments are made up of the interest alone, and you do not repay any of the capital until the mortgage term is complete. Because you are only paying back the interest on the loan, you will pay less each month than you would with a repayment mortgage.

If you do choose an interest only mortgage, you need to make sure that you know from the outset how you intend eventually to pay off your mortgage loan.

Each month you will repay interest on the amount borrowed, but at the end of your term you need to be able to pay off the remaining capital. This may be achieved by taking out an Endowment, Pension or ISA, which should provide you with the amount you need at the end of your mortgage term.

You must be aware that the value of investments plans can go down as well as up and are not guaranteed upon maturity. This makes an interest-only mortgage a more risky option than a repayment mortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the website.

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at


Mortgage refinance applications hit 18-year low -
Mortgage refinance applications hit an 18-year low. With no major move in interest rates and continued weakness in home affordability, there was not a lot of ...
US mortgage applications drop last weekXinhua

all 37 news articles »

Askari Bank signs agreement with Pakistan Mortgage Refinance Company
Daily Times
Askari Bank and Pakistan Mortgage Refinance Company (PMRC) signed Master Refinance Agreement. Under this agreement PMRC will provide Askari bank with long-term funding at fixed rates to promote housing finance. The agreement was signed by Mr.

'Flat' mortgage market ahead
CUNA News (press release)
This year is turning out like most people predicted in the mortgage arena. Rising interest rates have significantly hampered the mortgage refinance market. The growth of the purchase market can only be as great as the inventory of available homes. In ...


Rocky stocks and rising rates hit mortgage applications, down 3.2%
While tight supply of homes for sale had been plaguing buyers for much of this year, listings are increasing, but so are prices and interest rates, weakening ...
Mortgage applications can't stay afloatHousingWire
Mortgage applications drop as refi volume falls to an 18-year lowNational Mortgage News
Mortgage Applications Continue to Slide, Interest Rates Slightly Higher24/7 Wall St.
Scotsman Guide News
all 15 news articles »


Declining Home-Builder Confidence Weighs on Housing Market Outlook
"Both home purchase and mortgage refinance applications decreased over the week, driven largely by declines in conventional applications. Mortgage rates increased over the week for most loan types." Despite a confluence of negative forces for housing ...

and more »

The Mortgage Reports (blog)

Mortgage refinance checklist: what you need to refinance your home
The Mortgage Reports (blog)
Preparation is vital prior to applying for a mortgage refinance. You have to do the math and figure out if it makes financial sense. Plus, you need to learn the facts and shop around. Getting your paperwork in order is crucial, too. Tackling these and ...

National Mortgage News

Mortgage refinance applications decline to 18-year low: MBA
National Mortgage News
Mortgage applications decreased 1.8% from one week earlier as refinance submissions fell to their lowest in nearly 18 years, according to the Mortgage Bankers Association. The MBA's Weekly Mortgage Applications Survey for the week ending Sept. 7 found ...

and more »

ETF Trends

Mortgage Applications Dropped by Rising Rates and Stock Declines
ETF Trends
The Mortgage Bankers Association reported that mortgage applications fell last week–dropped by a one-two combination of rising interest rates and stock declines. Overall, mortgage application volume suffered, falling by 22% compared to a year ago and ...

and more »

How Credible works
Credible News (blog)
It's quick and painless. Tell us a little bit about you and your home to get accurate prequalified rates without impacting your credit score. 2. Compare rates from multiple lenders. View the interest rate and cost breakdown of each loan to choose the ...

and more »

National Mortgage News

Mortgage refinance candidates cut by half in the past four months
National Mortgage News
The number of mortgage borrowers for whom it made sense to refinance declined by nearly half since the end of last year and is at its lowest since November 2008. Approximately 2.3 million mortgagors are candidates for a refinance, a decline of 2 ...

Google News

home | site map