Are Interest-Only Mortgages available to Owner Occupiers...??

Becca

Are interest-only mortgages available to property investors only, or are they available to owner occupiers?

herbiesjp

Anyone can have an interest only mortgage if they want

Becca

Thanks

How do most owner occupiers who take out an interest only mortgage pay off the capital?

raq

Only having mine for another 2 years then jumping straight onto repayment, no worries about this for the time being

herbiesjp

Some take out the interest only as a short term stop gap - to convert to a repayment mortgage as soon as possible.

Others may have savings/investments that they intend to use

Some plan to downsize, and use the sale proceeds to buy a new property.

Some rely on an inheritance

Some only want the property for a short timescale and so do not look at a repayment mortgage, as only a little amount of capital will have been paid back in the time they wish to keep the property.

All of the above have their associated risks, and so you need to be aware of these before going for any option (the list is not exhaustive)

HTH

plane_boy2000

I have interest only as it meant that we could get the bigger house we wanted rather than moving again in a couple of years time. Its also reduced our outgoings for a couple of years while all our 3 kids are pre school age. My parters income is quite high, and paid hourly so although she only works a little at the moment this will change over the next few years and will allow us to either switch to repayment or just do as we do now which is to overpay whenever we have some spare cash.

I know that the interest only is costing us more overall, but given that we have jumped a couple of rungs on the property ladder and now have a house that will see us throughthe next 20 years we have saved maybe £20k in moving costs

jm28cardiff

My parents bought their house in the late 60's for 4 grand on a repayment mortgage.......if they had done it interest only, with no repayment vehicle, they could have paid that 4 grand off at the end on a credit card if necessary!

Becca

When someone takes out a repayment mortgage, and presumably an interest-only mortgage also, the lender requires some evidence of income (unless it's a self-cert).

If taking out an interest-only mortgage, do lenders enquire as to how the mortgagee intends to eventually pay the capital? Or do lenders not ask this?

jennifernil

Yes they do ask. We recently remortgaged with Nationwide on a 2 year deal and had to show proof that we had a lump sum coming from a pension plan that would repay the loan.

Becca

If someone wants to take out a 25 year interest only mortgage as an owner occupier I wonder if they also ask as to how the mortgagee intends to repay the capital?