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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