repayment v interest only

wizard3891

can u change your mortgage from repayment to interest only keeping with the same bank?

and can this be done within the first year of mortgage being taken?

also is this a good way of freeing up cash to pay other debts off early

mummytofour

Yes, we did and wont be going back to repayment for a while, alas needs must.

wizard3891

how much do you save a month on interest only?

and is it easy to change

silvercar

One phonecall to your mortgage provider will tell you if it can be done, what they will charge for the privilege (lots do charge!) and what the new payments would be.

It's a good way of paying off other debts if the interest your paying on those debts is at a higher rate. But what you are actually doing is moving the debts from other places to your mortgage. Your mortgage will still need paying off and interest only payments will not do that. At some point you will have to consider how you are going to pay the capital of your mortgage off.

Barney088

Lenders will call this a VOMO a Variation of Mortgage Offer and will charge you a fee, I guess around £300. However they will need to know why and being sceptical the answer "I want a cheaper mortgage" may not be the one they are looking for. As a previous responder said, you need to be responsible for the debt and need to know how you are going to clear it. One option is to revert back to Repayment next year, however another £300 fee would be payable unless you are switiching your mortgage. It may be a worthwhile excersice to find out how much you new repayments will be if you keep the same original term. eg, you have a 20 year term now and pay £500 per month. Have a year at interest only at £300 per month then move back to preyamnet over a 19 year term. WHat will the payments be on the mortgage, probably higher than they are now. Is this new figure acceptable to you?

Good luck

wizard3891

thanks for the advice

I will make some equiries and see

lindabea

The repayments on an interest only mortgage is very easy to work out. Take the %rate of interest on the amount of the loan

eg 100000 X 4.5% = 4500.00 per year or 375.00 per month

Hope it helps