First time property buying basics – part 1
Renting versus buying
Repayment versus interest-only
The less common type, often only available to those with large amounts of equity (i.e. low levels of debt) these days, is the interest-only mortgage. Here, you commit to make regular interest payments but then find another way to pay off the capital you owe. Options include using equity released from other properties, if you own several, using a pension tax-free sum (subject to taking advice) and using a stock-market based vehicle to save the capital you need. All carry risks.
Fixed versus variable interest
Some borrowers may be eligible for a slightly different kind of deal too – the offset mortgage. We’ll finish off by taking a quick look at how these work.