Lastly you can choose a fixed rate – either for defined time periods or (unlike in the UK) fixed for the entire term of the mortgage. Rates are generally higher the longer the term or the higher the loan to value.
- Fixed rate loans will generally have exit penalties for early repayment, though these can be discounted in some cases.
- Some banks will fix the monthly repayment from day one so you always know what is going out of your bank account every month, though this is not a fixed rate. If the index goes up or down they will alter the term of the loan and will report it to you every year on your annual mortgage statement.
- Some other banks will provide a capped product, which means there will always be a ceiling on the rate that you get at the start.
- Finally, you could also benefit from a fixed rate during the first years, and then on to a variable rate (with or without a cap).
Obtaining an Interest only product makes sense if this is your intention. However, an interest only mortgage implies showing the bank you have the equivalent (and more!) of net assets in other investments/equity. We now have more options and access to hybrid products which we can look into together, to satisfy both your needs and the bank’s expectations. Please contact us for further information.
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