Repayment, Interest only or a mix of both?

singlesaver

My fixed rate ends at the end of December. I have been looking for a new deal. My mortgage is £145000 and the value of my house is £172000. For a fixed rate I can get a deal at around £840 per month. However, using the HBoS site where it offers a choice of interest and capital, I can get a lower monthly rate. For example, if I type in £110000 for interest and the rest as capital my payments would be lower. What are the pros and cons of doing this?

I am very confused at the moment as an FA advised interest only which would have much lower monthly payments and increasing my mortgage to £154000. I don't need to increase my mortgage - reducing it is my only aim!!

hostman

Cons with IO are it could take longer to repay the loan. You'll need an investment vehicle in place to pay off the IO part at some stage. While you pay IO, you never pay any of the loan back.

The lender should ask you to prove you have something setup to pay off the IO part.