making overpayments on interest-only morgage

I have an interest-only morgage if i make overpayments on it will the overpayments come straight off my balance ?

I was going to go back to a repayment morgage but i would imagine that we would have to go through a morgage application and i know that because our incomes have greatly reduced over the last couple of years i dont think we would pass a credit search .Just to make things simple instead of changing back to repayment could i just make overpayments to my interest-only morgage to pay off morgage ?

Replies

  • TOPAZ_2TOPAZ_2 Forumite
    65 Posts
    Yes, any overpayments that you make will come of the capital balance, as your normal payment covers the interest only.

    But check with your mortgage provider on what your overpayment limits are - sometimes its a fixed amount or a fixed %

    if you are on the SVR however, you may be able to make unlimited overpayments

    Topaz
  • susieannesusieanne Forumite
    446 Posts
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    Im with Intelligent Finance on there SVR i will have to double check but im sure they let you make overpayments i hope they do anyway thanks
  • rjenk74rjenk74 Forumite
    36 Posts
    Part of the Furniture 10 Posts Combo Breaker
    Hi all,

    sorry to go slightly off track, but with an interest only mortgage , if you overpay by exactly same amount as if you had repayment mortgage every month (obviously changing as the term progresses), would you have paid of the full mortgage at the end of the term?

    I.e is overpaying an interest only mortgage basically the same as having a repayment mortgage, if your overpayments matched of course!

    sorry if that sounds confusing :-)

    cheers
    Rich
  • susieannesusieanne Forumite
    446 Posts
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    rjenk74 wrote: »
    Hi all,

    sorry to go slightly off track, but with an interest only mortgage , if you overpay by exactly same amount as if you had repayment mortgage every month (obviously changing as the term progresses), would you have paid of the full mortgage at the end of the term?

    I.e is overpaying an interest only mortgage basically the same as having a repayment mortgage, if your overpayments matched of course!

    sorry if that sounds confusing :-)

    cheers
    Rich

    That is a very good question and i would like to know this myself because i havent done the maths yet .My situation is i had alot of unsecured debts ,loans & credit cards which we was only paying min payments on so,we did have a repayment morgage with 23 years to go so we made the decision to go interest-only for a couple of years to try and pay off these unsecured debts .At the moment its fantastic because we are on a SVR and it is really low so we are doing really well in paying off our unsecured debts .I have planned by the end of the year we should really start to think about going back to a repayment morgage if overpaying does the same job as repayment im thinking maybe we should do this but i really do need some advice as you say on by how much we would need to overpay .We owe £122,000 over 22 years can anyone help ?
  • dimbo61dimbo61 Forumite
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    Part of the Furniture 10,000 Posts Name Dropper Photogenic
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    You both need to read the T & C that came with your mortgage offer or ring your lender
    use " whatthecost" to work out how much it would cost for your mortgage on Interest only and then on repayment.
    If you are allowed 10% overpay each month/year then you could overpay the IO mortgage each month/year so that it in effect becomes a repayment mortgage. SIMPLE
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