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Cost of Interest Only against Repayment?
PJGILL
Posts: 42 Forumite
On avaegae what would be th cost difference(Total repayable) between an IO and Repayment mortgage/
Phil
0
Comments
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The cost of a repayment mortgage would be lower as each month you are paying some interest and some capital, therefore the amount of your mortage drops each year. On an interest only you are doing just that each month paying the interest, your capital never reduces. You just have to pay off the capital at the end of the mortgage term with an endowment policy or whatever.
I took out a interest only mortgage in 1986 and as the saying goes if I'd known then what I know now, I would definately have opted for a repayment as am now facing an endowment shortfall.0 -
the cost difference you can work out here http://www.independentmortgages.uk.com/html/quick_calculator.htm
This is my own website so I'll probably get told off for this, but it should give you an idea of costs.
HTH
MMI am a Mortgage Adviser
You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thanks MM for the link (sorry no thanks button) I have put in to my favorites.
IMHO Repayment is the best bet, having been stung in the endowment market.0 -
Thats OK, I REALLY like terrys chocolate oranges, I'll PM you my address.
MMI am a Mortgage Adviser
You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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