repayment or interest only and overpay equivalent to repayment?

gentlepurr

hi

just ahd 2 quotes from bank,

£70000 over 15 years repayment £550 per month
£70000 over 15 years interest only £321 per month.

if i make over payments of £100 per month on interest only, i will have knocked £30000 off the capital at the end of the 15 years. house is cuurently worth £280000, and i intend to downsize & have nil mortgage before the 15 yr period is up, paying the remainder of the capital off with some of the equity, so at the mo, interest only, and the overpayments is looking good, i feel comfy with it, but would appreciate your opinion.

many thanks

xx

silvercar

Sounds fine provided your plans don't change and the price differentials at the time you sell mean you can pay off the outstanding mortgage and have enough equity left to buy a smaller place.

Lucy_Lastic

Have you considered a 50/50 repayment/interest only mortgage?

Or maybe that takes away the flexibility that you would have with your plan?

Just a thought.

gentlepurr

Lucy_Lastic wrote:

Have you considered a 50/50 repayment/interest only mortgage?

Or maybe that takes away the flexibility that you would have with your plan?

Just a thought.

hi lucy, want the repayments to be flexible as poss, would like to eat into capital as quick as poss, but is there any advantage in doing it set at 50/50?

thanks xx

robnye

wont you have the cost of life policy..... is there a difference in cost of a dta policy and a full amount policy?

AndrewSmith

Also remember that as you overpay and reduce the mortgage balance, the amount payable in interest will reduce also in line with the new balance.

Ensure you choose a mortgage with daily calculated interest which will mean the overpayments will be deducted from the outstanding balance immediately.

This will also add an accelleration factor to the reduction of the capital balance if you continue to pay the same amount.

Andy

stevenclarkuk

Be carefull,

If you have a interest only account some banks will not allow you to overpay each month by as little as £100.
With my Abbey interest only mortgage the minimum overpayment is £500, so I would have to save up 5 months of £100 payments and only then send a cheque for the £500... losing some of the benefit.

Worth checking this with your supplier..

Steven

Lucy_Lastic

Gentlepurr,

Not sure of the advantages of the 50/50 mortgage, I just did it because it was easy. I can still make overpayments as well.