FTB: Natwest Interest only, saving options

vienly

I'm planning to take out a mortgage with Natwest 3 year fixed 4.39% 75% LTV. I called them today to apply for a interest only option and they asked where my savings will be going, ISA stock and shares or Private Pension.

I have an Cash ISA account which I max out every year (£3600), is that the same as having an ISA stock and shares account?

I have a company pension, but am I right to assume that is not the same as having a private pension?

_Andy_

How do you actually plan to pay the mortgage off? £3600 a year isn't going to be enough surely?

opinions4u

It boils down to:

1) Why do you want interest only?

2) How do you intend to repay the debt?

3) If you get a lower rate on this cash ISA, why would you rather have that and pay interest on a mortgage balance attracting higher interest charges?

vienly

It's not going to be enough but I plan to save £1k minimum a month, it will be going to a savings account but when I told Natwest that, they said I must have an ISA stock and shares account which I'm wondering if it is the same as a cash ISA account?

_Andy_

No it's not the same.
Why not just go capital repayment if you have the income?

vienly

I'd like to pay interest only because then I would know how much exactly interest I would be paying a month and how much I am saving to pay back in the end.

I plan to change/remortgage (if that is the correct term) after 3 years if I can find a cheaper lender paying interest only.

I know I am able to save enough a month, but I need to know if cash ISA is the same as having a ISA stock and shares account so that I can tell Natwest over the phone tomorrow.

vienly

_Andy_ wrote: »

No it's not the same.
Why not just go capital repayment if you have the income?

It's not the same, ok thanks....
I'll be on a very tight budget if I go capital and repayment, and I'd like to have a bit of leeway with the money income. (for emergancys)

_Andy_

The reason they prefer S&S by the way is the long term return is/should be better than just interest on the cash ISA.

olias

vienly wrote: »

I'm planning to take out a mortgage with Natwest 3 year fixed 4.39% 75% LTV. I called them today to apply for a interest only option and they asked where my savings will be going, ISA stock and shares or Private Pension.

I have an Cash ISA account which I max out every year (£3600), is that the same as having an ISA stock and shares account?

I have a company pension, but am I right to assume that is not the same as having a private pension?

This may help...I have been told by a Natwest manager than when applying for an interest only mortgage, they require you to state what repayment vehicle you will be using, but they do not need to see, nor do they ask for proof of this. If that is indeed the case, then just tell them it's a ISA stock and share account. And before some of the holier than thoughs on this site scream fraud, surely if the OP has a repayment vehicle along the lines of what Natwest ask for (even if it is not exactly what they were envisioning) then there shouldn't be an issue IMO.

Olias

opinions4u

vienly wrote: »

I'd like to pay interest only because then I would know how much exactly interest I would be paying a month and how much I am saving to pay back in the end.

They will give you an annual mortgage statement that tells you how much interest you've paid and how much your debt reduces by. Lenders are nice like that.

I plan to change/remortgage (if that is the correct term) after 3 years if I can find a cheaper lender paying interest only.

If house prices have dropped you may not be able to. If your debt has dropped at the same time it increases your remortgage options.

I know I am able to save enough a month, but I need to know if cash ISA is the same as having a ISA stock and shares account so that I can tell Natwest over the phone tomorrow.

Different animals.

Go on to a repayment mortgage, start reducing the capital outstanding and at the same time keep on saving, but save slightly less.

Don't fall in to the trap of having a mortgage that lasts forever when you don't have to.