Interest only

pistolpete81

Hi everyone. having a few money problems at the mo and struggling to pay mortgage. spoke to my lender (abbey) about changing my repayment mortgage to a interest only for a short period of time but was told that this would affect my credit rating due to it being class as being in arrears with my payments. Is this true, can anyone shed any light on the matter?? would be very grateful.

Mrs_Bumble

Depends on whether they are saying that they will accept the interest only amount for a period of a few months but will affect your credit rating as will show as arrears, but won't actually switch the mortgage over to interest only? Did you ask for a payment arrangement? What did they say exactly?

pistolpete81

I asked them if it was possible to switch my mortgage to interest only mortgage. they said yes for a price of £75 and then told me it would affect my credit rating?

Mrs_Bumble

In that case I would ask for a second opinion because I don't understand that.

Dave_PiFS

I would agree with Mrs Bumble if you have asked for the loan to me formally changed to IO then this should not affect your credit history. You should as advised speak tosome one else at Abbey.

koexelek

pistolpete81 wrote: »

I asked them if it was possible to switch my mortgage to interest only mortgage. they said yes for a price of £75 and then told me it would affect my credit rating?

That doesn't sound right

If they have agreed a switch to interest only, and you make your payments on time, it should not damange your credit rating.

Get it checked out though

steve237

I have paid Abbey £75 to change to interest only in the past. It should not affect my credit rating, they never said it would, anyway.

In my case, it was meant to be temporary while my wife got a new job, but after a few months we reached the end of out tracker period so called them to see what they could offer. They offered a competitive 7 year fix deal and allowed me to stay on interest only (we paid a lump sum off the mortgage to get an even better rate, so in effect we are reducing our debt.)

Perhaps if you have a small LTV and haven't been able to keep up full repayments for long, this means it will effect how they rate your credit score as a business? Maybe that's what they meant.

Mrs_Bumble

If you are on interest only and have made the required monthly payment then it shouldn't affect your credit rating as you are maintaining the payments.