Interest Only Mortgages....?

milky_mouse

Hi there,

I am currently enjoying the full benefits of a RBS tracker mortgage. I have had the tracker for coming up to two years and is due to end in July. I will then go on to their current variable rate which will mean I will see quite a big increase in my monthly payments. My loan was for 80k and is on a repayment mortgage.

A friend of mine works for LLoyds Bank and she has been told, off the record by one of their mortgage people, the best thing to do in the present climate is to get an interest only mortgage. What is saved on the monthly payments is saved seperately and then pay off a lump of the mortgage anually. I think the best time to do this is around the beginning of the year (i think??) as to avoid interest being calculated and added on for the year.

Is there any substance in this does anybody know? Are there big savings in repaying the mortgage this way?

Regards.......

Rikki

You need to seriously consider how you will pay the mortgage off at the end of term.

You will need life insurance in place for all named on the mortgage just in case anything unfortunate happens.

With interest only mortgages you can make any size over payment you like. You are not limited to the 10% rule.

Interest is calculated daily.