Guide to Mortgage Options for Short-Term Plans
Are you planning to sell, move, or make other financial changes in the near future? Short-term mortgage options can provide flexibility, allowing you to reach your goals without long-term commitment. This guide breaks down the best mortgage options for short-term plans to help you choose the right fit.
Why Choose a Short-Term Mortgage Option?
A short-term mortgage can offer financial flexibility, particularly if you’re planning a life change. Here’s why a short-term option might be right for you:
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- Avoid Long-Term Commitment: Short-term mortgages are ideal if you expect to sell your property soon or refinance again within a few years.
- Potential Interest Savings: A shorter term can mean lower interest payments overall.
- Financial Flexibility: Many short-term mortgages come with fewer restrictions, making it easier to adapt to your changing financial goals.
Not sure if a short-term mortgage is right for you? Check out our guide to refinancing strategies for other options.
Best Mortgage Options for Short-Term Goals
If you’re considering a short-term mortgage, here are the top options that might work for you:
Adjustable-Rate Mortgages (ARMs)
An ARM typically offers a lower initial interest rate, which adjusts after a set period. This is a good option if you plan to sell or refinance before the rate adjustment.
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- Ideal for: Homeowners who plan to sell or refinance within a few years.
- Benefits: Lower initial rate, potential for cost savings if you sell before the rate changes.
Learn more about how ARMs work in our Adjustable-Rate Mortgage Guide.
Interest-Only Loans
With an interest-only loan, you only pay the interest for a set period, usually 5–10 years. This can be a good option if you’re looking to keep payments low in the short term, with plans to sell or refinance before the principal repayment period begins.
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- Ideal for: Property investors or homeowners expecting a significant cash flow change.
- Benefits: Lower initial payments, flexibility in the short term.
Bridging Loans
Bridging loans provide temporary financing, “bridging” the gap between selling one property and purchasing another. This is particularly helpful if you’re transitioning between homes and need quick funding.
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- Ideal for: Homeowners looking to buy a new property before selling their current one.
- Benefits: Quick access to funds, covers costs until your property is sold.
Explore more about this option in our Bridging Loan Overview.
Things to Consider with Short-Term Mortgages
While short-term mortgages provide flexibility, it’s important to consider these factors:
Higher Monthly Payments
Short-term loans may require larger monthly payments due to the shorter repayment period.
Market Sensitivity
Adjustable-rate loans are susceptible to market fluctuations, which can increase costs unexpectedly.
Exit Fees
Be aware of any early exit fees if you plan to sell or refinance within a short period.
FAQs: Mortgage Options for Short-Term Plans
How do I know if a short-term mortgage is right for me?
If you plan to move, sell, or refinance soon, a short-term mortgage can save you money and offer flexibility.
Are interest-only loans available for owner-occupied properties?
Yes, but they are often more common in investment properties. Check with your broker for specific eligibility.
What happens if I don’t sell before an ARM rate adjusts?
You can refinance or continue with the adjusted rate. Speak to your lender or broker to explore options if you find yourself in this situation.
Ready to Explore Your Short-Term Mortgage Options?
At Lagos Financial, our expert brokers can help you determine the best mortgage for your short-term needs. Connect with us for personalised advice and a plan that fits your goals.