Exit fee to change to Interest Only

Kanu13

We moved house at end of September and took out a fixed rate mortage at 5.84% 25 year term value of 150,000 the exit fee if we changed now would be a hefty £4529.

However with an imminent redundancy on the cards the only way we could afford our mortgage on one wage is to go Interest only. once we are both earning a healthy sum again we would easily be able to afford to put savings away towards the repayment too.

Is this something we should consider doing with the interest rate being so low and of course the large exit fee?

We would have the option of taking a payment break, however this would obviously increase the interest amount too.

Thoughts greatfully received.

Thriftysaver

Hi Kanu,

I changed my mortgage to interest only for the same reason. I didn't have to change my mortgage product, therefore no exit fee. It cost me £75 admin fee. My friend did this also. Call your mortgage Lender and ask.

It depends on how much equity in your home you have whether your rate would be any different to what you are on now, so it might be as well to just change your mortgage to interest only on the same product.

Hope this helps

Thriftysaver

opinions4u

Kanu13 wrote: »

We moved house at end of September and took out a fixed rate mortage at 5.84% 25 year term value of 150,000 the exit fee if we changed now would be a hefty £4529.

That still might prove to be a good rate over the next 25 years.

However with an imminent redundancy on the cards the only way we could afford our mortgage on one wage is to go Interest only.

Before you commit to this, find out how much you would save. It may not be as much as you think.

once we are both earning a healthy sum again we would easily be able to afford to put savings away towards the repayment too.

Is this something we should consider doing with the interest rate being so low and of course the large exit fee?

You don't have to change product to move on to interest only. Some lenders will let you move to interest only for a modest fee (eg £75) while retaining the rate. Others will manage a payment plan for you in times of hardship that will allow you to pay less without it being recorded as arrears and without charging fees. This may be a preferable course of action. Understand the impact on your credit record before agreeing to something though.

We would have the option of taking a payment break, however this would obviously increase the interest amount too.

Some lenders are restricting payment holidays to customers where the debt will be more than 90% of the value at the end of the break. This may not be the option to take.

Basically, you need to talk to your lender about what options are available to you and for how long. This will differ from lender to lender. Keep notes of what's been discussed and with who!! I would personally start stockpiling cash now to see you through the next few months until a new job is found (and keep it in a savings account with a different organisation!).

koexelek

It will be at your lenders discretion whether they will let you go to interest only or not

Kanu13

Thank you to all who offered their advice. I will contact our lender to find out what our options are.
:T