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changing from repayment mortgage to interest only?

I haven't been able to find any info on this before I contact our mortgage lender.

I'd like to change our mortgage from a repayment mortgage to an interest-only. We could afford the interest only but if we stay on a repayment we'll have to move out and it will be more expensive to rent than pay interest (not even counting the cost of moving)

Has anyone done that? If we were to apply for a mortgage today, I doubt we would get one as our income is too low and too uncertain so I'm hoping by switching from one to the other at the same lender, they won't re-examine our income.

Thanks for your help
Got rid of all my credit card debt, reduced crazy utilities bills, learned to budget, and now trading down to a smaller property. Lurking around the DIY forum.

Comments

  • We looked at this recently, but worked out we would only be saving £30 or so a month. We also looked into whether we could take a payment break, which seems that it would help us better in the short term. We still haven't made our minds up, but perhaps others can help both of us!!
  • _Andy_
    _Andy_ Posts: 11,150 Forumite
    You will need to contact your lender, they may allow it but each lender has different criteria.
  • we would only be saving £30 or so a month.
    Wow I thought there would be much difference. Did you contact your lender to get a quote or how did you calculate it?

    Thanks Andy
    Got rid of all my credit card debt, reduced crazy utilities bills, learned to budget, and now trading down to a smaller property. Lurking around the DIY forum.
  • we contacted our lender and asked them to work it out. We're with the halifax and they've been very helpful so far.
  • KarenBB
    KarenBB Posts: 1,115 Forumite
    Another option to reduce the payments would be to extend the term of your mortgage on the repayment basis. Your bank could tell you what the maximum term is you could have and what the payments would be.
  • Thanks Karen I'll get the lenders to calculate both options, but I think it's quite a long mortgage anyway.:confused:
    Got rid of all my credit card debt, reduced crazy utilities bills, learned to budget, and now trading down to a smaller property. Lurking around the DIY forum.
  • A calculator like this will help you work out what cost would be for either switching to interest only or extending the term.

    http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

    Switching to interest only will be dependent on the lenders criteria and your loan to value etc and if the loan to value is high they are likely to want a repayment vehicle to be in place.

    What is causing the problems currently? As sometimes it is better to address the cause.
    I 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.
  • As sometimes it is better to address the cause.
    Thanks for the link to the calculator. Yes you're absolutely right there. OH out of a job for the foreseeable future, my income won't cover the mortgage as it. I'm not looking for a permanent solution but maybe something to buy us a bit more time.
    Got rid of all my credit card debt, reduced crazy utilities bills, learned to budget, and now trading down to a smaller property. Lurking around the DIY forum.
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