Is it more expensive to pay just the interest on a mortgage?

lipo

I would be interested in taking out an interest-only mortgage. Are those more expensive in terms of fees and the level of interest rate than repayment ones?
Thanks

Gorgeous_George

If you can find someone to lend you the money the rates should not be higher. However, I do not know why you would want to take all the risks and hassle that homeownership brings when their would be very few benefits.

At the moment, I'd prefer to rent.

It's your call.

GG

poppy10_2

Over the term, you will be paying out a lot more in interest payments compared to a repayment mortgage. This is because you are not making any inroads into teh capital.

So say if you took out a £100,000 mortgage over 25 years at 6%.

For an IO mortgage, 25 years from now you will still be paying 6% of £100,000 i.e. £6000 per year in interest.
Whereas with a repayment mortgage you would only be paying say 6% of say £5,000 i.e.£300 per year in interest.

orinoco

And remember, with an interest only mortgage you must have some way of paying off the balance at the end of the term...