Q About Mortgages!!

lazy&indebt

Hi Everyone

My qustion is - Is an 'interest only mortgage' a mortgage type on it's own or can you have like a fixed rate interest only or a tracker interest only mortgage?
Hope this question makes sense!

Will.Power_2

Interest only is where you pay only the interest to the lender, and then have to repay all the capital that you borrowed at the end of the loan term. (The alternative is 'repayment', where you repay some of the capital each month.)
The mortgage 'product' is the deal you have on the interest rate (fixed, capped, flex. etc.)
Hope this helps

lazy&indebt

Thank you!
So someone could go for a tracker for instance but only repay the interest?
Can you make overpayments on an IO mortgage if the lender permits?

skaff

yes and yes!

johnofhertford

There is another alternative, which is "part and part", i.e. part repayment and part interest only. For example, suppose your total mortgage is 150000, you could pay 100000 on a repayment mortgage and 50000 interest only, or any other combination in theory. You'd need to have some other means of paying off the 50000 at the end of the term. There are various situations in which this might be applicable, e.g. you may have taken out an endowment policy with an interest only mortgage and if the endowment is predicting a shortfall you could convert part of the mortgage to repayment in order to cover the shortfall.