Solicitors Financial Services (Central Scotland) Ltd is authorised and regulated by the Financial Conduct Authority.

We are entered on the FCA Register No 232377 at www.fca.org.uk/firms/systems-reporting/register  

Registered in Scotland No 191717.  Registered address: Suite 38, Alloa Business Centre, Whins Road, Alloa, FK10 3SA.

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Buy To Let

Advantages

• Buy-to-let mortgages are designed for landlords who buy property specifically to rent out.
• They could help you become a property investor

Disadvantages

• These mortgages are usually more expensive than normal
• Investing in property is risky, so you shouldn’t take out a buy-to-let mortgage if you can’t afford to take that risk.
• if house prices fall, you might not be able to sell for as much as you had hoped.
• If the property sells for less than the amount you owe on the mortgage you’ll be left to make up the difference. This is a risk that increases the higher the percentage you borrow.

Endowments

Advantages

• Regular reviews are carried out on many plans to ensure they will pay off the mortgage at the end of the term.  If the growth on the funds is better than assumed you could receive a lump sum over and above the mortgage amount, or pay off the mortgage early
• Life cover is automatically included in the plan.  You may also be able to include critical illness protection and waiver of premium benefit.

Disadvantages

• If you stop an endowment early you may get back less than you invested
• Endowments are only suitable to repay long-term mortgages, e.g. at least 15 years.
• Endowments invest in the stock market and are not suitable for risk adverse borrowers.
• If the underlying performance of the endowment has been less than assumed, you may need to increase the contribution.  If so, the policy should be reviewed and considering given to making additional arrangements

Repayment Mortgage

Advantages:

• The mortgage is guaranteed to be repaid at the end of the term providing that payments are maintained.  You can see the mortgage reducing each year (albeit very slowly in the early years).

Disadvantages:

• It does not contain any form of savings, so there is no possibility of additional return or early repayment.  However, the mortgage could be repaid early if payments are increased.

You may need to take out separate life and/or critical illness cover to ensure the mortgage can be repaid if you die or suffer serious illness.  You should consider the benefits of permanent health insurance, should you become ill and be unable to work

Is your mortgage advice as clear as it could be…?