Thinking About Interest Only..

Simon_Pugsley

Hi all

Me and my partner have recently borrowed almost £22000 between us on 0% credit cards, this was to pay off a no interest loan from a family member.

The minimum payments on these cards (8 in total) are £474 a month, a total off £5688 in the first year would be coming off the total debt.

This obviously leaves us needing to re-finance the 0% cards to the tune off £16500. I have never been at ease with such a heavy debt burden on my shoulders, and Im thinking of going interest only for two years to pay off these debts asap.

Have spoke to A+L they are fine with me going interest only, and instead of paying a lump sum at the end of the mortgage, i can pay extra for the remaining term when i switch back over to repayment mortgage in two years.

If i did go interest only it would be £210 less a month, which could all be used to pay off these credit card debts, £2520 a year added on to the min payments would be £8208 a year.

Im also unsure of how much we would be able to borrow on 0% in a years time, especially as we all ready have 8 cards with lenders, so that cuts down our options of companies who would offer us 0%.

Any suggestions would be welcome, does this sound like a good idea or not.

amj_2

how much equity do you have in the property the mortage is on?

dimbo61

simon this is where you need to make the interest work for you.
1 pay the interest only mortgage payment each month for next 2 years.
2 pay the minimum credit cards payments each month
3 save the difference from the repayment mortgage and interest only mortgage into an ISA or two ! and every penny you can save between now and when you have to repay the 0% cards.
With luck and hard saving you might have you debts reduced by half and look for other 0% deals in twelve months time.
dont forget the 2.9/3% tranfer fee to move you debt from one card to another but you need to clear the debt in 2 years GOOD LUCK

Simon_Pugsley

I have roughly £30000 equity in the house.

Rikki

If you do decide to go interest only on the mortgage make sure you have life insurance in place should anything unfortunate happen.