Interest Only Mortgages.

Interest only mortgages let you pay only the interest on your loan each month. This means your payments are lower compared to a repayment mortgage. It’s important to remember that the total loan amount needs to be repaid at the end of your mortgage term, so you must have a repayment plan in place.   

Blueprint Financial Solutions’ experienced team of mortgage advisers takes the time to understand your needs and goals and provides personalised mortgage advice to find you the most suitable interest only mortgage. We work with clients in Gloucestershire and across the UK providing ongoing guidance and support to adjust your mortgage plans as your financial circumstances change.

What is an Interest Only Mortgage?

You can choose between an interest only loan or a repayment mortgage. The difference between the two is what you pay each month. 

With an interest only mortgage, you only pay the interest on the loan. Monthly payments will be lower, but you won’t repay the loan during the mortgage term.  You’ll need to pay off the loan amount at the end of the term. It’s important to plan how to pay the loan, such as selling your property.  

If you apply for a repayment mortgage, you’ll pay a combination of interest and loan. You pay part of the loan with monthly interest until it’s fully repaid.  

For example: On a £300,000 mortgage at 4% interest rate over 25 years:

• Interest only: £1000 per month, you’ll owe the full £300,000 at the end of the term.
• Repayment: £1584 per month, you’ll clear the full loan by the end of the term.

Interest only mortgages offer more flexibility and lower payments, but you must clear the loan at the end of your term. Despite higher monthly payments, repayment mortgages clear the total debt, meaning you won’t owe anything at the end of your term.  

What Are the Criteria for an Interest Only Mortgage?

Lenders view interest only mortgages as having a higher risk compared to repayment mortgages. Because of the increased risks with this type of loan, lending criteria are often stricter compared to other mortgage options. 

When considering your application, lenders will want to be confident that you can fully repay the loan at the end of the mortgage term. You’ll need a clear repayment plan in place to apply for an interest only mortgage. You might choose to sell your property or use other funds, such as savings. It’s important to remember that lenders will check your repayment plan thoroughly and will often not approve applications that use uncertain methods, such as relying on property value increases.  

Lenders prefer applicants with steady, high-paying jobs or reliable income from self-employment. During the application process, you’ll be assessed on whether you can afford the monthly interest payments and pay any other expenses, such as student loans and living expenses. 

If you’re a high-net-worth individual, you might find it easier to be approved for an interest only mortgage. Lenders view applicants with significant assets, large amounts of savings or who own other properties as much lower risk. 

An interest only mortgage could be a suitable choice for you if you have carefully planned and managed finances or assets. However, they are not suitable for everyone, and it’s a good idea to speak to a mortgage broker for advice before applying for this type of loan.

Why Should I Get an Interest Only Mortgage?

As with any type of mortgage, there are advantages and disadvantages with an interest only mortgage. 

One advantage an interest only mortgage offers is lower monthly repayments, allowing you to focus on other financial priorities. If you’re a buy-to-let investor, you can sell your property to pay off the loan at the end of your mortgage term. If you’re a high net-worth-individual, or applicant with a large amount of savings or investments, you may find it easier to repay the loan portion of an interest only mortgage. This is because you’ll have a range of repayment options and financial resources available to you.

If you’re going to apply for an interest only mortgage, it’s important to be disciplined with your financial planning. Budgeting carefully and making monthly payments into a savings account is a good idea. You must have a clear plan to repay the loan at the end of the term, including choosing to use your savings or investments or selling your property to clear the debt. Planning and organising your money properly will reduce your financial risks and build lenders’ confidence in your ability to repay your mortgage. 

If you don’t have a robust payment plan, you are at serious risk of financial problems at the end of your mortgage term. Not having a repayment plan might mean you can’t repay the loan, and you could be forced to sell your home or find other ways to secure the money.

How Can Blueprint Financial Solutions Help You Get an Interest Only Mortgage?

Blueprint Financial Solutions’ team of professional advisers can help you decide if an interest only mortgage is right for you. We support you throughout the entire mortgage application process, simplifying jargon, liaising with other parties, and keeping everything as quick, simple and stress-free as possible.

To help us understand if an interest only mortgage is suitable for you, we start with a detailed, personalised consultation. This allows us to carefully and accurately assess your mortgage needs. We take the time to learn about your financial situation, future goals and repayment plans.  

Our experienced team will then provide tailored mortgage advice services matched to your individual financial background, making sure you fully understand the benefits and risks of an interest only mortgage. 

We have access to the whole of market, helping you choose a competitive interest only mortgage deal. We work closely with many trusted lenders, and our strong lender relationships help us find the most suitable terms that match your financial needs. From lower interest rates to flexible repayment options, we secure mortgage terms that work for you.

Once we’ve found the most suitable interest only mortgage and terms for you, our team of mortgage advisers will create a bespoke mortgage solution that closely aligns with your current financial situation and long-term plans.

We understand that your financial circumstances will change, so we will continue to offer tailored advice, guidance and support and adjust your mortgage plans to match your changing financial goals. 
 
It’s important to plan ahead and allow yourself plenty of time if you’re considering an interest only mortgage, so book an early consultation with our team at Blueprint Financial Solutions. We’ll help you plan ahead, explore the most suitable interest only options for you and build a strong repayment plan.

An early consultation with us allows you to find out if an interest only mortgage is right for you. We have access to some exclusive interest only mortgage deals on the market through our membership of the Quilter Financial Planning network, and our experienced advisers can secure terms that match your individual goals.

Detailed financial planning means you’re ready for the end of your mortgage term and reduces your future stress.

Fill in our contact form or email info@blueprintfs.co.uk.

If you’d prefer to speak to us, call us on 0800 644 6402.

Book your consultation today and take the first step towards securing an interest only mortgage!