Repayment Vehicles

Methods for Completing Interest Only Mortgage Policies

Interest only mortgages will have the same amount outstanding at the end of the term as was originally borrowed. As such borrowers need to have some means of repaying the capital at the end of the term

Endowment Policy

A monthly investment plan which aims to provide a lump sum at the end of the policy term with which to repay the mortgage. It also provides life insurance to ensure that the mortgage is repaid in full in the event of death of a borrower. Traditional with profits policies are offered by life insurers and more modern unit linked policies are offered by banks and building societies. These policies involve a risk as the maturity value is dependent on the investment performance so could be more or less than the amount required to repay the mortgage. Many policies have come in for criticism in recent years following poor investment returns. In view of the risks involved specialist advice should be taken.

Individual Savings Account (ISA)

A tax free investment plan which can accept monthly and/or lump sum payment, with a current maximum of £7200 per tax year. There is no built in life insurance so a separate plan needs to be taken out. There are varying degrees of risk and the maturity value is dependent on the investment performance so could be more or less than the amount required to repay the mortgage. In view of the risks involved specialist advice should be taken.

Pensions

Many pension plans provide a lump sum as part of the benefits. This lump sum could be used to repay a mortgage. Pensions are very tax efficient but again there are risks involved and the maturity value is dependent on the investment performance so could be more or less than the amount required to repay the mortgage. In view of the risks involved specialist advice should be taken.

Your home may be repossessed if you do not keep up repayments on your mortgage. Memigo Money provides information but does not sell or provide advice on mortgages or their suitability. There may be a fee for mortgage advice; the precise amount depends on your circumstances.

For adverse credit mortgages the overall cost for comparison will vary, the actual rate available will depend upon your circumstances. Ask for a personalised illustration.

Get a Quote