Repaying Your Interest Only Mortgage

If your mortgage is interest only, it is up to you to ensure that you have provisions in place to repay your mortgage. Throughout the term of the mortgage you will be paying interest to the lender, but what will happen at the end? Doing nothing is not an option as the lender will want their money back at some point in the future.
 
Sale of property – this is where you decide to repay your mortgage by selling your property and using the proceeds from the sale. The downsides to this are that your property must be able to sell at a high enough price to cover the outstanding balance and any fees – great in a rising market, but maybe not when the property market (like today) is, at best, in a state of confusion. You also have the draw back of having no option but to sell your family home. If you decide you want to downsize, you may be able to fund the purchase of a smaller property from the sale proceeds, but there is no guarantee that you will have enough equity in your current property.

Lump Sum or Regular Overpayments
Offset Mortgages
Investment Vehicles

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The above advice was produced by Mr Manish Patel (BA hons), if you require any further information or have any questions regarding financial advice, please feel free to contact him. Email financial advisor

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