Explain... Standing Mortgages


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This is a niche market product based on an interest only mortgage, whereby the lender does not arrange a separate investment vehicle tied to the mortgage to repay the capital at the end of the mortgage term.

There could be several reasons for not needing an investment to pay the capital back to the lender. These could be:

Pensioners who have a small mortgage and enough funds tied up in their estate to cover the capital.

Someone with a trust fund, inheritance or assets which can cover the repayment.

Someone who has bought to rent the property out and would pay back the capital when the property is sold, keeping the equity. This is the riskiest strategy for Buy-to-Let as property prices can decrease, leaving a shortfall.