The housing market is expanding its options for borrowers looking for more range in their mortgages. New products and larger loans are now on the table for those looking to buy into property of a higher value.
The best-ever choice of mortgages for buyers
Banks and building societies are now offering high-value borrowers more appealing mortgage packages to draw investors and higher net worth home buyers into the property market. Interest-only mortgage models are making a comeback, with higher net worth individuals being targeted for this renewed option.
Interest-only Mortgages: a good option for high-value properties?
An interest only mortgage requires monthly repayments, but only enough to cover the interest on the mortgage amount borrowed. The loan value itself is not reduced, and the full amount of the loan will need to be paid back at the end of the loan agreement period. Though interest only mortgage options dropped in popularity after the 2008 financial crisis, high net worth borrowers are now more likely to benefit from an interest only or part and part mortgage.
The interest only model is seen as riskier by lower value borrowers, but for higher worth individuals, a complicated income stream or a collection of assets of a higher value might make interest only more appealing. Many interest-only mortgage loan options come with a lower initial deposit value, making it a potential option for those looking to spend less in the short term, and more in the longer term. It may well be suitable for those looking to buy a property to rent it out as a private landlord, before selling the property at a later date to pay off their mortgage loan agreement. This would make money and help savings in the short term, and be affordable in the long term.
Leeds Building Society has widened its range of financial products for high-value borrowers, making mortgage prospects more attractive. The financial institution now has a two-year interest only mortgage, offered at 1.6% for a loan to value ratio of up to 50%. It also offers a 1.7% two-year mortgage, part fixed rate and part interest only, for a loan to value ratio of up to 75%.
The new financial products are offered as an attractive prospect for those interested in investing in property, or perhaps for those buyers who expect a significant increase in their income in the future. If the home buyers are expecting to have saved a significant sum during the mortgage loan period, it may be a cheaper option for them in the short term only to pay off the interest on their loan, rather than using a standard repayment package.
The interest only mortgage is ideal for those seeking to invest in property, whilst the part and part mortgage might be more appealing to home buyers. The products are made even more appealing as they come with a free valuation, legal services with fee assistance for remortgages, and a fee of only £1,999.
Other banks and building societies that offer this type of mortgage loan can be found on the high street. TSB, Halifax UK, and Skipton Building Society are just some of the financial institutions offering interest only loans. Those looking to take out a mortgage loan should be aware of the potential requirements for this type of loans; for example, a minimum income of £75,000 per year in salary may be required before the loan can be offered. Before taking out a mortgage loan of this type, borrowers should consult financial advisors and be aware of the risks and rewards of this kind of mortgage option. It is also advisable to explore the options available from different banks and building societies to find the mortgage loan that best suits your needs.