Lenders have developed many different types of mortgages, which offer borrowers different ways to repay.
There are various forms of ‘interest only’ payment plans. The monthly repayment consists only of interest on the amount borrowed. The capital is not repaid monthly as part of the mortgage payment, but by means of a separate savings plan of some sort. The most usual are:
This form of mortgage has recently come under criticism because many plans were sold with generous forecasts. Unfortunately, policies haven’t generated enough money to repay the mortgage.
The Office of Fair Trading is a government body dedicated to protecting consumers’ rights. Consumer Direct is their telephone and online service for offering advice on consumer issues, and it can offer help on everything to do with buying and selling your home.
For more information about mortgages and regulations, visit the Mortgages Made Clear section on the Money Made Clear website, created by the FSA (Financial Services Authority) or for cheaper mortgage rates see 1stplusmortgages