The Key Difference

Powered by bespoke software, an Index Mortgage offers:

• a high probability of significant interest and term savings
• without any change in the borrower’s repayment profile
• and without any diminution in the lender’s margin.

These seemingly irreconcilable outcomes are possible because an Index Mortgage differs from a traditional mortgage in an important respect.

Whereas the interest rate under a traditional mortgage is defined by a single parameter (being some measure of the time value of money), the interest rate under an Index Mortgage is formulated by reference to the time value of money and a second variable, namely the performance of a financial asset.

We call this Linking.  We define the economic value of a Link by reference to an Index.

“The Index Mortgage is an entirely new approach to mortgage lending …”

Citigate Dewe Rogerson, LaunchSure Report