advantages of interest only mortgages?

evosy1978

i would like to know what advantages there are of this type of mortgage. Surely there are some advantages. they seem to get alot of bad press?

are there rates better than normal capital mortgages for starters?

thanks

getmore4less

In most cases they need to be part of a broader financial plan and if you had one of those it would be clear if an interest only mortgage fits in the plan.

ManicMum

There are no advantages. You are merely prolonging the inevitable - you have to pay the money back.

Pincher

Mainly good for Buy to Let purposes.

Repaying the principal means you are putting more more capital into the investment, reducing the overall return on capital, as well paying more tax on rental income.

wymondham

Cheaper monthly payments ...... usually only used temporarily or if a repayment vehicle is in place though. Lots switch to this when times are hard, and may use these as standard.

Wutang_2

ManicMum wrote: »

There are no advantages. You are merely prolonging the inevitable - you have to pay the money back.

Ignore this - listen to Getmore4Less if the mortgage is part of a broader financial plan then it can be hugely beneficial.

Gorgeous_George

Nobody knows what the future holds.

You may die before the mortgage is paid off. 'Interest only' gives you more money to spend enjoying life.

If death ain't your thing, how about redundancy or poor health. 'Interest only' maximises the insurance payout.

Have a great day and cheer up!

GG

p00hsticks

Gorgeous_George wrote: »

Nobody knows what the future holds.

You may die before the mortgage is paid off. 'Interest only' gives you more money to spend enjoying life.

Or on the other side of the coin, in twenty five years time you will realise that you have been effectively 'renting' the house you thought you owned, and either end up with the property being repossessed and gonig into rented accomodation or having to pay a large lump sum to pay off the capital.

getmore4less

p00hsticks wrote: »

Or on the other side of the coin, in twenty five years time you will realise that you have been effectively 'renting' the house you thought you owned, and either end up with the property being repossessed and gonig into rented accomodation or having to pay a large lump sum to pay off the capital.

You can come up with many examples of why it is bad or good.

No one can list them all,

The key, is interest only an andvantage in YOUR financial plan.

For those with a plan it tends to be fairly obvious, if not then lay out the plan and ask if interest only fits.

Those that don't have plans , well they tend to ask.

hillcats

Personally, I would suggest that people keep away from interest only mortgages.
I see no advantage to this type of mortgage, and I wouldn't be surprised if they were stopped soon!