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An investment vehicle is a mechanism whereby someone or a company can take initial investment and can make that grow and so make a profit on the initial capital. Examples of investment vehicles include common stock, preferred stock, bonds, options, futures, annuities, and collectables. With an interest-only mortgage, it’s important to have some sort of investment vehicle so that the balance of the loan can be paid off at the end of the term. In some situations, the investment vehicle that the borrower has available is able to perform much better than the cost of interest that is being paid on the mortgage and so it makes sense to take interest-only mortgage so that they can free up money to put into the investment vehicle. Many buy-to-let investors see property as a means to invest and increase the amount of wealth they will have over time. They estimate that the increase in value of property wil outstrip the amount of interest they’re paying and therefore will leverage their investment assets. Choosing the correct investment tool to enable you to pay off the interest-only mortgage takes astuteness and knowledge of the market you’re looking to invest at. Many self-employed business owners see their business as an investment vehicle to repay their mortgage down the line. This can put pressure on the business; sometimes it is better to use an independent investment tool. Whatever the investment tool that the individual has chosen to enable them to pay off their mortgage, it’s important that they monitor it and ensure that if it’s not performing how they intended it to, they get something else in place or look to move on to a repayment mortgage so that they don’t end up in a situation where their house is in jeopardy. |
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