Interest-only mortgages
Receive a lump sum upfront while making monthly interest payments on the loan
The highly experienced advisers at Burlington Financial take pride in providing personalised and comprehensive independent financial planning services.
From our offices in Bridlington, East Yorkshire, and Scarborough, North Yorkshire, we are dedicated to assisting you in achieving your financial goals while considering every aspect of your personal and financial circumstances.
Effective financial planning goes beyond the numbers. That’s why we adopt a holistic approach, focusing on what truly matters to you. By understanding the full scope of your life and future aspirations, we create strategies tailored to meet your unique needs. Would you like to explore how this approach sets us apart?
A holistic approach to financial planning
At Burlington Financial, our priority is understanding you. We take the time to consider your goals, priorities, and concerns, ensuring that no detail is overlooked. Whether you aim to plan for retirement, protect your family’s future, or explore new financial opportunities, our team is here to guide you.
What makes us different? We know that life is complex, and financial decisions can profoundly impact various areas of your life, such as inheritance, taxes, and benefits. That’s why our process is comprehensive and collaborative, keeping your best interests at the centre of everything we do.
Is an interest-only mortgage right for you?
Deciding to release equity from your home is a significant step, and it’s crucial to weigh the options thoughtfully. One possibility to consider is an interest-only mortgage. Have you considered whether this option might meet your needs?
With an interest-only mortgage, you can receive a lump sum upfront while making monthly interest payments on the loan. These payments are typically at fixed or variable rates, providing you with a level of flexibility. Unlike other equity release schemes where interest accrues over time, leading to significant debt accumulation, this option ensures that the original loan amount remains unchanged. Later, the principal amount you borrowed is generally repaid when your home is sold.
But how do you know if an interest-only mortgage is the right choice for you?
Evaluating your circumstances
There is no one-size-fits-all answer because suitability depends on your personal and financial circumstances. For example, if the interest rate on your mortgage is variable, it could rise before your income increases, making payments harder to manage. Conversely, fixed interest rates offer more predictability, which some people find reassuring.
Another key consideration is inheritance. If leaving something behind for loved ones is a priority, you might find an interest-only mortgage less appealing. The loan will be repaid when your home is sold, which could reduce the size of the estate you leave behind. Additionally, equity release schemes, like an interest-only mortgage, can affect your entitlement to means-tested benefits. Your tax situation might also change, so it’s crucial to consider these potential impacts carefully.
Understanding the practical aspects
Beyond finances, it’s important to recognise the responsibilities that accompany these schemes. Lenders typically require you to maintain your property in good condition, which means allocating funds for maintenance. Regular upkeep helps safeguard your home’s value, but it’s an ongoing obligation to plan for.
The overall cost of entering into an equity release scheme goes beyond the loan and interest payments. Be mindful of the extra charges involved, such as arrangement fees, valuation costs, and legal expenses, which can vary by lender. Factor these costs into your decision to ensure there are no surprises.
Exploring alternatives
Equity release isn’t your only option. Have you considered downsizing to free up capital? This might be a simpler route for raising funds, especially if your current home no longer suits your lifestyle. Alternatively, family assistance could provide financial support, or other borrowing options might be available depending on your situation.
Discussing your plans with loved ones can be beneficial. Family members may offer insights or perspectives you haven’t considered, and their involvement can help ensure everyone is aligned with the decision, especially since the value of your estate is likely to be affected.
Want to discuss your plans to unlock the value tied up in your property?
When considering an interest-only mortgage, it is crucial to make a well-informed decision. Seeking independent financial advice and guidance from professionals ensures that you grasp every detail and can make a confident choice. Furthermore, independent legal advice is vital to fully understand the features, risks, and long-term implications of equity release.
At Burlington Financial, we strive to make this process as simple and clear as possible. If you would like to discuss this further, we are here to help. Contact our offices in Bridlington or Scarborough to learn more. Together, we can develop a strategy that works for you. Contact us today to start the conversation.
