Types of Hybrid Mortgage PDF
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This document explains hybrid mortgages, which combine capital and interest-only repayments. It provides examples demonstrating how these types of mortgages work.
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Term: 01. Types of hybrid mortgage Part repayment and part interest only mortgages Also known as ‘mix and match’ or ‘part and part’ They are part capital repayment part interest only Can often come about when a borrower has a repayment vehicle with a projected shortfall and to safeguard the borrower...
Term: 01. Types of hybrid mortgage Part repayment and part interest only mortgages Also known as ‘mix and match’ or ‘part and part’ They are part capital repayment part interest only Can often come about when a borrower has a repayment vehicle with a projected shortfall and to safeguard the borrower may convert pert of the loan to capital repayment For example: If the borrower has an interest only loan of £100,000 and the endowment policy they are using to fund repayment is projected to produce only £90,000, then £10,000 can be converted to capital repayment As long as the endowment produces the projected amount at maturity, the loan will be paid at the end of the term Recommended Reading: MoneyHelper– Dealing with an Endowment Shortfall Which? – Hybrid Mortgages
