Interest Only Mortgage? Is it the best way to go?
My partner and I are looking to buy our first home together. We are using a consultant is seeking financial and until we have an interest only mortgage for the first two years. However, I know I will not be able to make savings to cover the existing mortgage. He thinks that if I remortgage after two years the inflation rate would mean we would have enough capital to put on the house, therefore, does not cause any extra. Has anyone else been in the same position? If so, what do you recommend? Any help would be brilliant as I am now at the stage where you want to rip my clothes. We in the United Kingdom (Scotland) if that helps anyone?
Realize that the power of "payback" key is that you pay very little in the early years, and a lot of interest. Typically in a 30-year fixed mortgage, you have to pay 1% of the principal in the first year, and 1.1% in the second. Therefore, if you refinance after two years on a traditional mortgage, refinancing is 98% of the balance in a traditional mortgage. Your adviser is making two predictions: 1. The house value will increase in two years in February. Interest rates in two years will be the same or lower than now. Ask her how she knows to be true? If you want to have an interest only mortgage, not having one with only a horizon two years / globe. Go for a mortgage LIBOR rate basis, allowing you to make any time within a horizon of 10 years.
UK’s Mortgage Mess
