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Index-linked

This means the idea of linking a certain value to an appropriate index measuring inflationary change. Some savings schemes are index linked, and ideas have been put forward for index linked mortgages. Briefly, the interest rates would be lower than normal, but the amount of money owing would be related to the value of the property and would rise in step with house prices indices. This is a new and largely untried concept in home mortgages and, maybe, best avoided.

The exception might be an offer of an index-linked mortgage, which enables you to buy a property that would otherwise be too expensive for you – nevertheless think long and hard before entering this commitment. If in a few years time your house value may well have doubled – more than likely – but so will your outstanding mortgage!

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