Unit Trust Mortgage

A capital sum to repay the loan is built up through investment in a unit trust or unit trusts of the borrower's choice.

Advantages:
• Unit trusts that perform well may offer opportunities for early repayment.
• Unit trusts can be encashed at any time.
• Offers flexibility and choice for borrowers with an understanding of the potential risks.

Disadvantages:
• There is no guarantee of the value of the investment.
• Poor performance could mean a shortfall that that the borrower will have to meet.
• Timing of the encashment will affect the return of the fund.
• The available investment funds do not benefit from a tax-advantaged scheme and a Capital Gains Tax liability may arise when the units are cashed in.
• Can be a high risk option.