Interest Only Mortgages : Interest only mortgage information

With an interest only mortgage the payment you make does not reduce the capital sum of the mortgage. For example if you took out a £100,000 mortgage after five years of paying for this you would still have an outstanding balance of £100,000.

Therefore if you wish to use a interest only mortgage you should have another way of paying off the mortgage.

The Financial Services Authority (FSA) has decided to step in and change the regulations. They now ask lenders to request firm evidence from new borrowers that they are saving a sufficient amount to cover the capital.

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