Interest Only Mortgages with Bad Credit
Getting an interest only mortgage with bad credit can be fairly straight forward depending on your reason for wanting interest only.
Interest only mortgages mean that you pay the interest part of the loan and no capital, which can reduce monthly mortgage payments significantly, however as you are only paying the interest its important to remember that at the end of the mortgage term, if you don't remortgage onto a capital repayment mortgage that the outstanding balance will need to be paid.
A bad credit Interest only mortgage can benefit the borrower in may different ways, the first and most obvious benefit is that it allows you to reduce your monthly payments substantially thus making the mortgage more affordable, this is the main reason why buy to let mortgages tend to always use an interest only payment method, the borrower for a buy to let interest only mortgage will recoup their monies and repay the existing loan usually on sale of the buy to let many years down the line.
Another benefit of the reduced payments is that it allows borrowers to get a foot on the property ladder, the reduced payments make the mortgage affordable - although care must be taken to make sure a plan is put in place to repay the capital at the end of the term, which is usually done via a remortgage onto a repayment mortgage once the borrowers have gotten used to paying a mortgage or repaired their credit.
Interest only mortgages for credit repair
A lot of people will remortgage onto an interest only mortgage with a sub prime or bad credit mortgage lender in order to repay bad debts - the bad debts listed on their credit file effectively force the borrower to use a sub prime lender with increased interest rates and other mortgage costs and repaying them can save thousands over the mortgage term, by going onto an interest only mortgage for a couple of years (like a fixed rate) to afford the higher interest rates allowing them to clear all their bad debts will most certainly mean they remortgage on a far better rate with a high street lender next time round.
If you have bad credit and want an interest only mortgage, either for buy to let purposes or credit repair, simply fill in the form at the top of the page and one of our specialist advisors will call you back.
