Interest-only mortgage deals have re-emerged as an option for borrowers after virtually disappearing for the past five years.
Interest-only deals, where the borrower only pays off the interest each month and not the capital, were immensely popular prior to the financial crisis because they were cheaper in the short-term, with borrowers confident that house price rises would more than cover the borrowed amount over the loan period, at which stage the sale of the property would be used to pay it off.
In 2007 interest-only loans accounted for 33 per cent of the mortgage market, but by last year, that figure had fallen to just three per cent.
Barclays/Woolwich and Leeds Building Society have recently introduced deals allowing borrowers to take out an interest-only loan with a 25 per cent deposit. Natwest are understood to be considering offering a similar deal.
Interest-only deals may not be attractive to all borrowers, however, their re-introduction is a demonstration that there are a myriad of options to consider when contemplating moving home, or remortgaging, and how important it is to speak to an independent mortgage advisor who is abreast of the best deals and record low fixed-rate offers that are currently available.
If you would like take advantage of these historically low home loan deals, and benefit from receiving the best independent mortgage advice, please call Steve Padgham on 020 8614 4782 or e-mail Steve.Padgham@fpgonline.co.uk.