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CS 1 - Femi: 15+5m focussed. - Coggle Diagram

- - - - usually int. only
        
        owner becomes landlord: smal business
        
        potential to cover mortgage repayment by rent
        
        borrower to show rental income enough to repay
        
        MUST do research*
    - - Covers only interest on pm repayment, end of term still owe borrowed amount
      - Endownment Insurance Policy
        
        to build capital sum on insurance
      - Currently less common BUT lower pm repay
  - - - Through Endownment Insurance Policy if int. only mortgaging
    - - We can say Femi represents Risk Neutral Attitude
  - - - Equity of Owner = value - amount lent
  - - - Fixed interest rate for stated years beginning of the term
        
        Benefits borrower IF interest rates rise during inital term
        
        End of stated period, switchs to variable rate
        
        Advise needed predicting future interest rates
        
        Helps when budgeting.
    - - Int. rate changes throughout term
        
        linked to lender's SVR rate
        
        borrower exposed to risk
        
        BUT if rate falls = repayment decreases
  - - - Lender's basic mortgage rate
        
        SVR related to BoE bank rate
        
        I.E. SVR falls -> repayment decreases
  - - - benefit from lower initial monthly repayments
      - 4 Moderate Income: BUT expect a rise next few years
      - DISAD! Realistic idea of afforability