Interest only Mortagage

mj8willia

Hello, just tried to put my mortgage on to interest only, too be told that new laws came into place yesterday 20th April 2009, stating that tou must send in evidence of savings/ investments to clear capital at the end of the term. Is this right i can find nothing about this on the net.

beecher

Perhaps they mean that the lender has changed their rules, rather than talking about a change in law?

opinions4u

mj8willia wrote: »

Hello, just tried to put my mortgage on to interest only, too be told that new laws came into place yesterday 20th April 2009, stating that tou must send in evidence of savings/ investments to clear capital at the end of the term. Is this right i can find nothing about this on the net.

Sounds like a change in lending criteria rather than the law of the land.

Possibly initiated by guidlines from the FSA.

The key question is "why would you want to go on interest only?", "how long for?" followed up with "how do you plan to repay your mortgage?"

mj8willia

only reason to interest only is to lower monthly bills, not for long a year or maybe two, repay mortgage by going back on repayment! Just seems a pain to set up alternative funding option just for couple of years, Though i will say that i have had disscussions with my bank for about a month and at no time has this ever been mentioned to me.

leicsmarkyr

me neither, I asked my mortgage provider can I go interest free for 6 months to help me out and they said no problem. All I need to do is sign a form and will transfer me

opinions4u

leicsmarkyr wrote: »

me neither, I asked my mortgage provider can I go interest free for 6 months to help me out and they said no problem. All I need to do is sign a form and will transfer me

Do you mean interest only? Or payment free?

Each indivudal's circumstances are different, and how each lender will deal with this will differ from case to case.

only reason to interest only is to lower monthly bills, not for long a year or maybe two, repay mortgage by going back on repayment! Just seems a pain to set up alternative funding option just for couple of years, Though i will say that i have had disscussions with my bank for about a month and at no time has this ever been mentioned to me.

The key questions are along the lines of

- what can the borrower afford? (if better budgeting can help them meet their full payment, then they should pay the full payment)
- what other commitments are the prioritising over and above their mortgage payment? (I don't see why people should keep their Sky dish and reduce their mortgage payments to pay for it, or go in to negative equity on their home in order to reduce a credit card balance)
- how will reducing payments for a period of time improve the borrower's position? (it may be right to agree to reduced payments while a borrower attempts to sell a property, but little point saying "pay a bit less for ever even though we know you'll never be able to afford the proper payments in future")
- what is the loan balance against the estimate value of the property?(a lender has to consider at what point repossessing the property will leave them with a likely loss)

If you want to lower monthly bills, your mortgage should probably be one of the last ones you look at asking for a concession on.

getmore4less

mj8willia wrote: »

only reason to interest only is to lower monthly bills, not for long a year or maybe two, repay mortgage by going back on repayment! Just seems a pain to set up alternative funding option just for couple of years, Though i will say that i have had disscussions with my bank for about a month and at no time has this ever been mentioned to me.

If you can afford the alterntive plan you should be able to afford the capital payments on the repayment loan.

mj8willia

All been sorted out now.
Thanks all for your advice.
Ans i've kept my sky dish!!!!!!!!!!!!!!!!