Interest Only Mortgage

dunstonh wrote: »

Why are you not making overpayments?

Overpayments aren't always allowed. I used to have an Abbey National interest only mortgage and used to pay by standing order, due to a interest rate cut the payments went down, but I carried on for a few months at the old rate. AN wrote to be to say this wasn't allowed and I had to reduce my standing order payment.

Dustonh whilst I appreciate you taking time to give your views from your experience of the banks processes as that does help me understand viewpoint, I do feel you should note your own words "Different people have different needs and what is right for one person might not be for another".

People may have different needs but your situation is not variable. You are where you are.

Precisely why I feel it is a shame the past system of bank manager being able to look at personal circumstances has gone. Not just in banking actually, we seem to be living in a world where people are no longer treated as people but more as statistics.

If we were back in that time, then a) you would have been forced to have a repayment vehicle. and b) they would go straight for repossession now.

However, I do not appreciate your tone. Using words such as "foolish" and "stupid" comes across as somewhat derogatory. We all have different views which make us act in different ways to different circumstances, and we don't know all those circumstances. It is not for us to stand in judgement.

The words used in the context were fair and correct. The credit boom years prior to the credit crunch were stupid. Almost everyone recognises that. There is nothing derogatory calling a period of time that has universally been recognised as being bad that. And again, foolish was correctly used as taking out an interest only mortgage with no plan to repay it is a foolish action. It puts you into a situation that is going to cause a problem later on.

You may not agree with what I have done but I was not asking for opinions on what I had done or why, I was asking for advice and suggestions for moving forward, maybe from people who had been in the same or similar situation.

I was not offering opinions. However, you do have this perception, which you have repeated in this thread, that you believe you are a good credit risk. I was trying to explain why you are not.

For factual information. Current interest only mortgage payment has just dropped from £640 to £590 pm. The part repayment part interest only was a 3year or 5 year fixed deal with a monthly payment of £530 per month. Though we went through many variances in the IO/repayment split and I was happy to look at one which had my payment up to £700pm as I know I can afford that. Full repayment would have been £900pm which I know I can't afford.

This is useful information and supports the earlier comments that you cannot afford a mortgage. Staying on interest only without a repayment plan just delays the inevitable.

Overpayments carry a 3% fee.

Only if you are in a deal.

My common sense suggests this is a better deal for both parties at this time, and their Mortgage Consultant agreed also, however their computer calculated my affordability couldn't reach £530 let alone more. She was as frustrated as I was that she couldn't do it.

A lowly skilled bank clerk is not exactly a strong reference for suitability. Also, it is a lot easier to be agreeable with you and blame others than it is to say what the problem is to your face. Mortgage rates are historically low. The lender has to check affordability and that doesnt mean looking at todays rates but at a higher rate that is more likely to appear some time in the future. They then look at the risks and a) you cant afford repayment even with the term extended and b) you cant afford payments on a part interest only/repayment when interest rates rise again.

Getting that deal is a bit like how the EU have dealt with Greece. Keep fudging it and kicking the real problem a couple of years down the road each time.