In certain circumstances, such as buying a second home for a family member, it may also be possible to get a regulated buy-to-let mortgage with some lenders. Those lenders that do allow this type of residential purchase may have slightly different criteria, and therefore a larger deposit may be required for second home mortgages. Some lenders allow interest-only mortgages for this purpose, however, you may need a specialist provider. If you’re able to meet the criteria, however, it’s perfectly possible to use an interest-only mortgage to purchase residential property. In fact, some lenders will only consider this type of mortgage for high-net-worth individuals. Often there are large deposit and/or equity requirements and high minimum income thresholds for residential purchases. In the past few years, however, interest-only mortgages have become more commonplace for residential purchases again, albeit with stricter criteria. Since the financial crisis in 2008, lenders have been more reluctant to offer interest-only mortgages on residential purchases, but have continued to offer them almost exclusively for buy-to-let investment purchases. Yes, although they are not as readily available as they once were and the lending criteria for them is usually more stringent compared to residential mortgages. Each lender has its own list of acceptable repayment vehicles, and this can range from the resale of the property to investments and savingsĪre they still available for residential properties? A typical term is around 25 years, however, in most cases, the lender will need to agree with your repayment strategy as part of the application process. It’s vital you have an effective repayment vehicle (method of loan repayment) in place to repay the lender the original capital borrowed at the end of the term. This is because mortgage interest is charged on the total amount you owe, and as the amount you owe doesn’t reduce, the interest charged will not change either. Whilst this can be a great way to keep costs low throughout the duration of the mortgage, as monthly payments will be significantly lower than repaying capital and interest together, you will end up paying more overall.
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At the end of the mortgage term, you’ll still owe the full amount borrowed, which will need to be paid in full at this point.
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How to Get a Non-Standard Construction MortgageĪs you might expect, an interest-only mortgage is a type of home loan whereby only the interest is repaid each month throughout the term.£500,000 Mortgages and the Monthly Repayments.£200,000 Mortgages and Monthly Repayments.The most popular place to start is our borrowing calculator or our affordability calculator. Which mortgage calculator is right for me? Our calculators give you a idea of what you might be able to borrow from us to buy a home, and what your monthly and total mortgage payments could be, for different types of mortgages.
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