Rate reduction on a fixed rate mortgage?!

feisty1

Mrs TB...........You have to do what is right for you at this moment, don't get drawn into the scaremongering on here........also maybe some of the posters are those who have never required flexibility with their mortgage. They followed the old route 25yrs, 24yrs etc on their mortgage when life was different. ...........It doesn't sound as if yr considering changing to interest only after being reckless........At some point i imagine you're going to return to work & will be able to "catch up" then.....As advisers Ian and I see many young families like you everyday, we have a duty to understand yr position and offer solutions.......so if you're at all concerned just refer to what both of us have written...enjoy yr family and don't worry..........

Ian_Griffiths_Halifax

Gorgeous_George wrote: »

In 2010 you will go onto Halifax's SVR (curently 4.75%). It is likely that the SVR will be similar even in 2010.

Stick with a repayment mortgage and your payments could fall from the current £1,157 to £960 per month.

If possible, save now. Anything at all. It will help bridge the gap between when you stop earning and when the fixed rate ends. It's going to be tight but you must have known that when you took out your mortgage.

What was your plan if interest rates had risen to 7% or 8%? I guess the baby wasn't part of your plan. This is the problem when lenders use both salaries to assess affordability.

In these extraordinary times, I'd like to see lenders reduce fixed rates for current borrowers but I can't see it happening. It doesn't work like that.

Best wishes

GG

On the same basis, changing to Interest Only now would change the payments to £1030 now. But if interest rates are as low as 4.75% in April 2010 then a Repayment mortgage would be £960ish as you say, and more affordable plus there is £70ish per month available to overpay by even more, to catch up on the Interest Only period.

whathavewedone

I don't think there's too much wrong with going interest only for a short period of time i.e while children are young and only one person is working.

You could wait until your mortgage runs out to ask then but if prices have dropped further it might be harder for you to get it then than it is now.

We have an interest only mortgage and have fixed until October 2011. By then our eldest will be at school and we intend to switch to repayment then as childcare costs will be cheaper if I were to work full time. We do put money aside to pay chunks off the mortgage though. We have already put 16k in last year (having bought August 2007) which is way more than we would have paid in one year with a repayment mortgage. I think going interest only is a good idea provided you set up a direct debit into a savings account for at least £100 a month and don't dip into it.