Life Plans Direct provides mortgage advice
Interest Only Mortgages
These loans require a payment to the lender in respect of the interest on the loan. Payments are usually made monthly. At the end of the term of the loan there will still be an amount outstanding equivalent to that when the loan was taken out. For that reason it is prudent to start a form of savings plan to run along side this type of loan so that the outstanding capital can be repaid at the end of the term. Subject to the movement of interest rates, the payments to the lender would remain level throughout the term.
Capital and Interest Repayment Mortgages
With a capital and interest mortgage, often called a repayment mortgage, the lender receives a monthly payment which is made up of both some capital and some interest. In the early years, the payments will be mainly interest as the amount outstanding is higher. However, as this amount reduces, so does the interest due and so in later years the amount will pay off the capital quicker. Providing the payments are maintained throughout the term of the mortgage this method should repay the outstanding debt by the expiry date.
Buy-to-let mortgage schemes are aimed at those individuals who wish to buy property as an investment, with the objective of obtaining rental income from their tenants. They may also view property as a good investment for capital growth.
Generally, the lender will not calculate the amount which it is willing to lend on a multiple of the borrower's income, but rather on the amount of rental income which it expects to generate. An example would be: Maximum loan to value 80%; rental income must be 125% of monthly mortgage payments when calculated using a rate of 5.50%.
The lender must exercise care in connection with the tenancy agreement and the borrower must take care with regard to appropriate tenant selection.
Equity Release schemes
Equity release schemes allow you to release tax free cash from your home to help you boost your finances in later life. The two main types of equity release schemes are lifetime mortgages and home reversion plans, with drawdown options also available.
Equity Release Council approved schemes allow you to:
Remain in your property for life, provided that the property remains your main residence. Move your plan to another suitable property without any financial penalty, subject to criteria. Guarantee you never fall into negative equity, which means you will never owe more than the value of your home and no debt will ever be left to your estate.
These are lifetime mortgage and home reversion plans. To understand their risks, please ask for a personalised quotation.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT
- The Financial Conduct Authority does not regulate some aspects of Buy-to-Let mortgages
- The availability of a loan can depend on the credit status of an individual.
This summary in no way constitutes a complete explanation of the mortgage products detailed above, or how they may suit you. For further details of mortgages and how these may help your personal circumstances, please seek independent financial advice.