Switching from a interest only to repayment

buenfoxa

Hi there,

New member and first post but have been lurking around for a while! My girlfriend and I brought a new build house in October. It was a 95% mortgage with the Halifax with the builder paying the 5% deposit.

We decided to go for an interest only tracker mortgage which tracks 2.2% above the base and has no collar. My question is would it be possible to switch over to a repayment mortgage without having to pay the early repayment fee as we have now go the house sorted and have extra money a month between us.

I've looked at the amounts more a repayment mortgage might be and even when the rates rise we would be able to cover the extra amount. The mortgage deal we have is a 3 yr one with the usual 3% early payment clause in the first yr dropping to 2% in the second yr and 1% in the last yr.

Just checking before I waste my time on hold with the Halifax!

Thanks for any help!

_Andy_

Yes it's fine you'll probably pay just a nominal admin fee.

buenfoxa

Many thanks - what sort of price would this fee be? Do any of you think it is a good idea to do this or save say £300 a month into a ISA?

ShelleyC_2

Might be worth building up some emergency savings ~ 3-6months of income just in case you run into any problems. Those in an ISA is a great idea so the taxman keeps his mitts off!

Then swapping to repayment would be a great plan. You can pop onto the MFW board and find tips to overpay it too :j

opinions4u

buenfoxa wrote: »

We decided to go for an interest only tracker mortgage which tracks 2.2% above the base and has no collar.

I think you'll find if you read the small print in your terms and conditions there is a collar at 3%. They just haven't enforced it (partly because the FSA threatened court action if they did).

My question is would it be possible to switch over to a repayment mortgage without having to pay the early repayment fee as we have now go the house sorted and have extra money a month between us.

The product and the repayment type are two different things. Therefore changing to repayment won't mean that you have to pay an early repayment fee. I believe they charge a tenner to do what you want! Ring them to check though as I can't find it on their web site.

dimbo61

If you can afford to do both
save say £300 a month into ISA,s and pay £300 a month extra on the IO mortgage or change onto repayment.
Check with the Halifax about the cost to change
I was charged £50
Please make sure you can afford the cost of repayment each month as no point getting into mortgage arrers when you MAY ! be allowed to overpay the same amount each month while on Interest Only GOOD LUCK

buenfoxa

opinions4u wrote: »

I think you'll find if you read the small print in your terms and conditions there is a collar at 3%. They just haven't enforced it (partly because the FSA threatened court action if they did).

The product and the repayment type are two different things. Therefore changing to repayment won't mean that you have to pay an early repayment fee. I believe they charge a tenner to do what you want! Ring them to check though as I can't find it on their web site.

Good to know - I'll have to check that.

Thanks for the advice, will go away and double check the sums before I do anything.

Thanks:T