Interest only Mortgage

Panda_on_a_Bike

Me and my partner are considering an interest only mortgage, what do we need to provide to prove we can pay of the debt at the end of the term?

Thanks

happybroker

That depends on what your plan is for repaying the debt.

PlutoinCapricorn

It goes back to your credit history. All you may need to provide is evidence that you are capable of paying their monthly payment. The lender is not interested in whether you can pay off the debt at the end of the contract or not simply because if you don't pay them they will repossess the house. Don't forget that until you pay their money they lent you in the first place the house is theirs anyway.

beecher

PlutoinCapricorn wrote: »

It goes back to your credit history. All you may need to provide is evidence that you are capable of paying their monthly payment. The lender is not interested in whether you can pay off the debt at the end of the contract or not simply because if you don't pay them they will repossess the house. Don't forget that until you pay their money they lent you in the first place the house is theirs anyway.

I don't think this is true anymore - they ask for evidence of a payment vehicle. The OP should be honest about how they intend to pay for the mortgage at the end of the term.

Dan:_4

They asked to see my pension fund when I went IO.

Panda_on_a_Bike

Thanks, I think they will justneed to know I have started the savings or investment for this so hopefully it will be ok.

dimbo61

"savings or investment " sounds like an endowment mortgage and they are not that popular at the moment cant you afford a nice simple repayment mortgage and overpay that instead.
If you cant afford a repayment mortgage or have a 20/25% deposit can you really afford this property ??

Fizzy1

I have just fixed my mortgage at 3.99% for five years IO and the bank only "advised" on the offer paperwork that we have a repayment vehicle in place. No proof was required. This gives me flexibility as my income can be irregular. I can overpay by 10% of the balance each year without penalty to reduce the capital.