Mortgage / intrest only dilema

Gray_m

Hello. Any advise/ideas would be MUCH appreciated. We have a 30 year mortgage for £164,000 and have been on a a fixed rate intrest only deal which is due to end in october. Due to buying at the wrong time and having little / no equity in the house we are limited to stay with our current mortgage lender. The mortgage will automatically revert to a 4.99APR intrest only un fixed rate. This seems to be the only option available to us.

We are hoping to overpay 1k to 1& 1/2K a year. Do you think this is too small? Hoping to get our equity back in the house so when the market does pick up we can be in a better situation? do you think this is the best way to do it at then mo?

is this the best thing to do? or does anyone have any other ideas? :rolleyes:

Oeillade

It's a difficult one. When my ex left I wasn't able to get a new mortgage deal when ours finished and I am on interest only as he won't pay anything towards it. The interest rate is quite low at the moment but it is bound to go up sooner or later when the bank of england rate changes.

So my advice is throw as much money as possible at it so that when the interest rate goes up you have a smaller amount to pay interest on.

Hope that helps.

firesidemaid

hi.

spend a little time on the mortgage boards, for lots of hints and tips to overpay on your mortgage. every little bit really does help!

save your coppers (we save 1s, 2s and 5s), and any 'extra' earnings such as quidco, ebaying etc and overpay whenever you can as well as revisiting your budgets regularly to see if there is more money to be saved - find out any overpaying terms of your bank.

also, make sure with your bank that as you overpay (and the interest reduces) that your bank keeps your monthly payments the same (and doesn't reduce them accordingly) so that you continue to overpay.

be warned - it can become addictive! good luck x