got an interest only morgage? Whats your plan?

Dan_1976

I have sat in an office with customers crying because they are at the end of the term and they cant pay it back. One chap was in his 70's and want to sell up and go back to where he called home. He could not do this as he did not have the equity, not enough income to pay the thing as he was retired and no repayment plan.

If your lucky enough to have the equity then great. But what if you term ends bang in the middle of a slump like we see now??

Its all personal choice and attitiude to risk, but repayment is the only 100% way of clearing your mortgage. Unless you dont pay it!! hehe

PeteHi

Peelerfart wrote: »

But then have you ever rented a place where you are responsible for the upkeep and maintenance ?

yes I have. Have you ever owned a place where you had to pay a service charge?

stuarthouse

A new frined has 66k repayment mortg.
In 5 years paid off just £500 of it.

I said would've been better to open an offset, get interest only mortgage,
put the difference from repayment everymonth into offset.

By now she would've cleared 10K-12K of mortgage & paid less interest.

Pssst

Joeskeppi wrote: »

At the end of the term you pay off the debt or give them the house keys.

Or more likely, remortgage, in fact I doubt many people ever get to the end of an interest only term.

But what if the end of the term happens at age 60 or 65? surely you wont be able to remortgage? you could find yourself homeless on retirement ?

Kittikins

Hello, can I ask what is probably a really stupid question....I have an interest-only mortgage on a 3 year fix and would like to pay money in to go towards the capital. I can't afford a repayment mortgage or to have endowments/ISAs but do occasionally have £100 spare which I'd like to put into the mortgage.

Will these payments reduce my monthly i/o payments as I go along as the capital is coming down or mean that at the end of the 3 year fix my outstanding capital will be reduced?

Like I said, probably a silly question that anyone with a brain knows the answer to, but....thanks in advance for any replies

Smurggle

kittikins, I am in the same position, I can only afford interest only at the moment but we intend to switch to repayment in 2 years time (when we will take out 25 year term), but at the moment we have the odd bit of money spare and was wondering whether we should just chuck it onto the mortgage,

anyone any ideas?

System

Generally, and this may not be the case for your mortgage, you can overpay 10% every month while your fix deal is in place.

When the fix deal ends, I believe you can make as many overpayments as you like.

silvercar

Joeskeppi wrote: »

Generally, and this may not be the case for your mortgage, you can overpay 10% every month while your fix deal is in place.

When the fix deal ends, I believe you can make as many overpayments as you like.

I agree, with the proviso that you should have some rainy day savings put by before you reduce your mortgage. Once paid into the mortgage it is not always possible to reclaim the money.

Kittikins

Thanks guys, that's good thinking - I am trying to work up to having 3 months worth of bills in savings so that I do only feed my mortgage with "surplus cash" (I'm so optimistic, lol) but if I make overpayments, does my interest-only payment reduce monthly whilst I'm going along or only at the end of my 3-year deal?

silvercar

Depends on the size of your over payment and whether your interest is calculated annually or daily. Differs depending on your lender.