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Interest Only Mortgages

A flexible mortgage option to reduce monthly financial commitments
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Keeping your interest rate constant for a specified term

An interest-only mortgage is a type of mortgage in which the borrower is only required to pay the interest on the loan for a certain period, typically the first few years, without making any principal payments.

How does an interest only mortgage work?

As the borrower is only required to pay the interest on the loan for a specified time, this means that during the interest-only period, the borrower's monthly payments are lower than they would be with a traditional amortising mortgage, where both interest and a portion of the principal are paid with each instalment.

It’s important to note that individuals who choose an interest-only option will need to have a means of paying off the mortgage at the end of the term, or when the mortgage is closed.

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Who could benefit from an interest-only mortgage?

Interest-only mortgages can be appealing to certain types of borrowers, but they also come with specific risks and considerations. Here are some scenarios in which someone might consider an interest-only mortgage:

Real Estate Investors

Real estate investors may use interest-only mortgages to maximise their cash flow. By making lower monthly payments, they can potentially free up more capital to invest in other properties or use for renovations.

Short-Term Homeowners

Borrowers who plan to live in a property for a relatively short period may opt for an interest-only mortgage. They can enjoy lower initial payments and sell the property before the interest-only period ends.

High-Income & Variable-Income Borrowers

Individuals with irregular or fluctuating incomes, such as commissioned salespeople, may use interest-only mortgages to reduce their monthly financial commitments. This flexibility can be useful when income is uncertain.

Financially Savvy Borrowers

Some financially savvy borrowers might use interest-only mortgages as a cash flow management tool. They make the minimum interest-only payments but have the option to pay down the principal when it suits their financial situation.
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Making interest-only mortgages easy for you

Windsor Hill works closely with individuals considering an interest-only mortgage to help them make an informed decision based on individual needs and circumstances.

Speak to one of our expert team members today to help you with your interest-only mortgage requirements at 01225 962 456 or email info@windsorhillmortgages.co.uk

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Whether you’re a first-time buyer or a seasoned property developer our team will find you the very best deal.

Our experienced financial, insurance and mortgage advisors take real pride in offering impartial advice, so you’ll have the peace of mind that your best interests are at the heart of everything we do.

Based in Bath, we enjoy getting to know our clients and listening to their requirements to ensure we provide the right financial solutions every time.

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