Mortgage help please

confused.com_6

Dear All,

I have had some advice from my mortgage broker I am not sure of

She suggests I take an interest only mortgage for my 2 bed flat

I admittedly would struggle to pay full repayments mortgage, I am 50yrs and due to retire 65 yrs, higher rate tax, but have £300 to pay to my daughter for next 3 years. The mortgage would be 100%

Yes property in this area is likely to rise above rest of london as getting extra transport routes so it is a good investment, but i am unlikely to find a cheaper property when I retire

She suggests some overpayment and put all other money in cash ISA, then use pension (£108,000) to part pay and get an equity release when i retire?

Is this very risky

miaxmia

If you are going to "struggle" to pay full repayment mortgage, it sounds to me like it might be your best option.

homer_j_3

If you spoke to a mortgage broker, they shouldnt have been giving you investment advice. If it was a Financial Adviser with Mortgage authorisation then fair enough. This includes discussing your pension and Isa's.

Interest only could be risky, the property market may go up in London and it may go down. You will have to take a risk on this. I appreciate that your belief for the rising market stands on some good reasons, however, it still is a risk. If you are also on 100% mortgage, this risk become a little more riskier because any downturn in the market will put you in a negative equity situation.

Have you explored Part and Part mortgage. This is placing part of the loan on repayment. and the other part on interest only. Clearly I do not know your affordability and I guess your adviser will have discussed this with you.

You should have £300 per month extra in 3 years time so worst case scenario is you could start putting this towards the mortgage reduction. I would therefore maybe looking to ensure that you do not tie yourself into a deal that is lengthier than 3 years so you can revise the deal at that point.

Of course this does present another potential problem on what interest rates will be in 3 years and whether you will get an equaly competetive deal.

Anyway, if you have any further q's then do not hesitate to post back

confused.com_6

Thanks HomerJ

Ill get her to look at part, part repayment, I didn't know about this, Ill see what length of deal I am tied into to.

THanks, food for thought