Worried...

thela1

Took out a two-year interest-only mortgage last year, with a 5% deposit. That rate will run out next October (I know this is miles off). But I was doing some research on the sort of money we'll probably have to pay out each month once we actually switch to a repayment mortgage, and it seems no-one would actually lend to us at the moment!

The house was 121,500 when we got it, and I think we put £6,500 down. At best, we'll have about £2000 to put down when we re-mortgage.

Are we screwed?!

beecher

You'll be able to change to repayment with your existing lender I'd imagine, rather than having to remortgage - with such a high LTV and prices coming down it is probably your best option to stay with them anyway. Are the rates they charge going to be affordable to you by next October? If not it might be worth going to the Debt Free Wannabee forum, and trying to cut spending elsewhere, ie on food/Sky etc. Good luck.

wymondham

No way of telling yet if this will/will not be a problem - too far in the future. Lots of things are likely to change between now and October next year.... Revisit this next Summer.

In the meantime you can prepare by saving and overpaying if you can, and getting rid of any debt you may have. If you can't remortgage for any reason then you'll just go onto SVR.....

Heyman_2

Need more info really. What is your current interest rate on your interest-only mortgage? When you took out the mortgage, what was your plan for paying the capital back? Do you think you'll be in a position to start doing that in the next few years?

Interest-only mortgages are only really any good to you when the market is strong and prices are rising. Unfortunately, at the moment, prices are generally on the slide but it largely depends where you are and what type of property you have. You need to make a 5-year plan encompassing your income and outgoings of what you are going to do and what you are going to need to start paying off your mortgage or even just tread water to ride out the current storm in the market.

If you find you can't find a feasible plan then it's probably time to sell up!

toltz

hi thela1,
Just wanted to let you know we are in exactly the same boat!
We took out an £170,000 interest only mortgage with 5% deposit which is due to end August 09.
We are just concentrating paying off our debts at the moment, to put us in the best possible position.
Still very worrying though...
Toltz