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Interest Only Mortgage Rates

The lowest interest only mortgage rates will help you to save money each and every month. The Bank of England has reduced base rates to half of a percent, so there are some extremely competitive interest only mortgage deals currently available. If an existing loan has just ended, you'll have been switched to Standard Variable Rate SVR. Although this is relatively competitive, you'll pay the lender a bigger margin. If your goal is to save the most money, you probably aren't getting the lowest rates. The exceptions to when SVR interest only mortgage rates are optimal is when you're in negative equity or your credit rating is really poor. These situations push up the cost of borrowing, so staying with the same lender is preferred.

Before you can look at the different interest rates, your current mortgage should have ended. If you entered a 3-year loan, you'll need to have made 36 monthly payments before you can move. Well, you can still get low interest only mortgage rates or non status mortgages, but you'd have to pay an early redemption penalty. This is likely to amount to several thousand pounds, but it usually gets lower as you approach the end of the agreement. If you aren't sure when you're free to move, you should either check the agreement or call your bank. The best interest only mortgage rates will only really benefit you when you can move without paying a penalty, so you may need to wait a few months. In order to verify this, you'll need to quantify how much extra you'd pay over the remaining months in the current agreement and deduct this from any penalty that is applicable.

About Interest Only Mortgage Deals

Rates may be low, but people are always looking to reduce their payments further. However, the Financial Services Authority FSA will only allow you to benefit from low interest only mortgage rates in two situations. Firstly, you've set up a suitable investment vehicle, such as an endowment policy, to repay the principal. Secondly, you can enter an interest only mortgage when you can afford a repayment loan. In other words, you're not just looking for interest only rates so that you can afford to get a mortgage. This is no longer an option for first-time buyers because it has the potential to compromise your ability to pay in the future. It's also a major negative if you can't pay off your loan before you enter your retirement years. Do you really want to be getting a remortgage when you're 67 years old?

If you want to benefit from low interest only mortgage rates, you're going to need to invest some money to repay the original sum of money that you borrowed. You'll need to enter a suitable investment, such as an endowment policy, Individual Savings Account ISA or pension plan. The latter is an option if your fund is sufficient and you plan to take a 25% tax-free lump sum when you retire. You can no longer just check a box that says that you've opted for interest mortgage rates on your application form. Although this is optional, it's advisable to review how your investments are performing every couple of years to see if you need to pay in any extra money. It's better to deal with any issues now than when your income drops at some point in the future.

Use of a Broker

When looking at the different interest only mortgage rates, not everyone will need to go through a broker. You may decide to use a price comparison site to trawl through all of the different loans for the best deal. Alternatively, you may just prefer to visit the website of each major bank in turn. It's slower, but equally effective. However, you may need help finding low interest only mortgage rates if you have a low credit score or you're self employed. There are fewer lenders that offer this type of loan and they can be difficult to find. Also, self employed people are no longer able to self certify their income under FSA rules. You'll need to provide proof of income.

Low interest only mortgage rates may be easier to find, but it's become harder to qualify for some categories of borrower. The best thing to do is see how you get on alone and turn to a broker if you're experiencing difficulty. The service provided by a broker isn't free; you should expect to pay 1% of the value of the loan as a fee. If you're able to gain access to loans that were previously available or you're able to save more than the fee, you may consider this cost to be worthwhile. You'll get help completing all of the paperwork and will have someone to turn to if you have any important questions.

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