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Mortgage Advice Centre - Low Start Mortgages
Low start mortgages are designed to take the pressure of monthly mortgage paymens in the initial years of the mortgage. A low start mortgage is usually only offered as part of a repayment moirtgage.
The first few years are paid on an interst only basis, no other investment vehicle is required to cover this interest only period. The monthly payments are then worked out so that the mortgage is repaid over the agreed term. For example if the borrower took out a 25 year term mortgage with 3 years interest only they are effectively taking out a 3 year interst only mortgage which will turn into a a 22 year repayment mortgage after the initial term.
The drawbacks of this type of mortgage is that the monthly payments will dramatically rise after the interest only period has finished. During the interest only period no capital will have been paid. This sort of mortgage product is suitable for somebody who is anticipating a rise in salary in the future. On the otherhand if finances get worse over then this could result in financial difficulty.
Contact the mortgage advice center to talk about low start mortgages.
Think Carefully when securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.