Changing from interest to repayment mortgage

fossilette

We have had our interest only mortgage transferred from GMAC to Gemini Holdings. We had planned to change to a repayment mortgage when our two yr fixed rate finished in Sept 09. Speaking to Gemini they say they only do interest only and we will have to remortgage elsewhere if I want a repayment. The trouble is we have no equity in the property so proberbly wont get another mortgage as we would need a 100 0/0, will they charge us if we pay over each month at the reapyment rate and would we complete the mortgage in the same time as if we had taken a proper repayment mortgage. Any suggestions would be welcome as I just don't know what to do.

kerry13238

you would have to ask them every mortgage is different but most say 10% per year if you went onto their svr though you can pay off as much as you want as your not in a fixed contract.

getmore4less

Just check if there are penalties/charges for overpayments.

If none then overpay what you can afford.

If the payment total is around the same as a repayment would be then yiu will pay it off in around the same time, just keep an eye on the ballance due and recalculate every few months to make sure you are on track.

Walter_J

fossilette wrote: »

We have had our interest only mortgage transferred from GMAC to Gemini Holdings. We had planned to change to a repayment mortgage when our two yr fixed rate finished in Sept 09. Speaking to Gemini they say they only do interest only and we will have to remortgage elsewhere if I want a repayment. The trouble is we have no equity in the property so proberbly wont get another mortgage as we would need a 100 0/0, will they charge us if we pay over each month at the reapyment rate and would we complete the mortgage in the same time as if we had taken a proper repayment mortgage. Any suggestions would be welcome as I just don't know what to do.

I'm not an expert but surely an interest only mortgage has no mechanism for reducing the capital owed. All you pay is interest so there is no point whatsoever in overpaying. The 'term' of an IO mortgage is irrelevent. After 20, 30, or 2000 years you still owe the same as you started off with!

If you can afford more per month you should set up a seperate repayment vehicle by way of a savings plan. Back in the day this was known as an 'endowment mortgage'.

They got a bad press in the end but were certainly better than IO mortgages which are going to bite an awful lot of people on the a$$ when they find they have in effect been paying rent to the bank for 20 odd years on a home they still don't own a brick of!

fossilette

Thankyou for all your advice I will certainly look into it and ask more questions, now I know what to ask!! I just feel flustered in that we set up a mortgage with who we wanted for what we wanted to do and then it was all changed without our knowledge and told that we can't do what we originally planned. It all semms very unfair but hey ho so is life so we'll make the best of it. Thanks again much appreciated.