By David P WalkerWhen you're taking on a new mortgage deal, there are a huge number of things to think aboutbrian atwood boots
But one fundamental choice you will need to make somewhere along the line is whether you want to be paying off capital each month or only the interest on that capital.

An interest-only mortgage is one in which you only pay off the interest accrued on the total capital each month, meaning the capital owed remains the same throughout the length of the mortgage deal.

Interest-Only Pros:

According to the Financial Services Authority, four in ten households have interest-only mortgages. There are a number of pros to interest-only mortgage deals, primarily that monthly repayments will be significantly lower than with a repayment mortgage. This means that you will keep more of your income each month to spend on yourself, or on home improvementsHerve Leger
, for example. In fact, with a very low base rate, an interest-only mortgage deal can seem almost impossibly cheap to maintain, depending on the type of mortgage you have.

An interest-only mortgage is also sometimes considered to be preferable in the eyes of buy-to-let investors. This is because they are able to claim back tax on the mortgage interestbrian atwood shoes sale
, and they may reason that rises in the property market will enable them to make capital repayments later on.

Also, with interest-only mortgage deals, you can choose a savings account or repayment vehicle which gains the best interest rates and is tax-efficient. If you can manage this well alongside the mortgage and keep up the payments (and not spend the money you have saved)herve leger sale outlet
, this option could even save you money in the long run.

Interest-Only Cons:

Interest-only mortgages are considered risky, as they do not provide the borrower with a complete outline for how they will pay off the capital they owe, and this can cause problems when the mortgage term ends if there is outstanding debt and no alternative means of repayment.

Also, while a repayment mortgage may be more expensive in the short termherve leger outlets
, in the long term you will be reducing the total capital owed which will, in turn, reduce the interest paid as well. With an interest-only mortgage deal, however, the capital will still be payable in full right up until the end of the mortgage term