Will sell flat after 3 years - will i get interest back for payments already made?

Joe_Bloggs

@pre-reg
Will you get any academic credits for your previous studies counting towards your new course ?
I'm sure the value of your flat will have gone up. Watch out for early repayment penalties and redemption costs. Did you request a redemption quote from your lender ?
J_B.

trackaccessgirl

I bought my place roughly 2 years ago nd I know for a fact that the value hasn't gone up (this is due to the area AND the fact that is was brand new so I overpaid!). I don't know about your individual details, but if the value has not gone up, you will probably come out of it having not made any money. Regardless of how much interest you have overpaid, if you still owe the same amount of capital, then this capital will need to be paid back to the bank, so you won't make anything unless the value has gone up or unless you have made seperate capital repayments. Can you not rent out the flat? If you did, you could continue to pay the mortgage with the rent until you made a dent in the capital you owe. Whilst your flat was being rented, couldn't you get a cheap room somewhere or live with someone like a partner, etc? Just a thought!

MyUserNamesTaken

ManAtHome wrote:

Anyway, less of the slagging peeps - one day you may be turning up for a vasectomy...

If I turn up for a vasectomy, you'd better call the BMC! I can't see many women having vasectomies.

other

where are u going to live while doing medicine?

tomstickland

Sorry, I was distracted by the use of the word brought, but to answer the original question with an interest only mortgage you just pay the interest on the loan each month and make no headway in clearing the debt. So, after three years you still owe the original amount.

pre-reg

tomstickland wrote:

Sorry, I was distracted by the use of the word brought, but to answer the original question with an interest only mortgage you just pay the interest on the loan each month and make no headway in clearing the debt. So, after three years you still owe the original amount.

thanks...i know that is the case, but i thought i might have paid too much interest for that period as it is a 25 year mortgage and i will be paying the bank back the original borrowed amount. does that make sense? Cheers

pre-reg

other wrote:

where are u going to live while doing medicine?

i will be moving to another town and living in halls possibly.

MyUserNamesTaken

pre-reg wrote:

thanks...i know that is the case, but i thought i might have paid too much interest for that period as it is a 25 year mortgage and i will be paying the bank back the original borrowed amount. does that make sense? Cheers

Nope, you won't get anything back. You haven't made any overpayments. All you've done is pay the specified interest for that period of the loan. You've had the money for almost two years, and you've paid interest on that loan for those two years. Think about it like this: Do you think they should have lent you that money interest free for two years? After all, that's what you're asking for if you think you should get the money you've paid back. Why do you think you've paid too much interest? By going for an interest only mortgage, you've chosen cheaper monthly repayments, knowing you will not be making a dent in the capital borrowed. That's why many people go for repayment mortgages. Repayment mortgages cost you more per month, but you're reducing the capital every time you make a payment, as well as paying off the interest.

When you have an interest only mortgage, all you pay is the interest. At the end of the loan period, you still have to pay back the capital in full. That's why you haven't paid off any of the original loan. See? If you've been paying the minimum required, you have not overpaid the interest, as you will have been charged interest at the rate agreed when you took out the loan (give or take rate changes). You haven't overpaid, therefore you do not get anything back (unless your flat sells for more than you paid for it). Incidentally, check the redemption penalties. If you've had the mortgage for less than 2 years, chances are you will have to pay a penalty for early redemption (unless you specifically went for a mortgage without early redemption penalties).

pre-reg

MyUserNamesTaken wrote:

Nope, you won't get anything back. You haven't made any overpayments. All you've done is pay the specified interest for that period of the loan. You've had the money for almost two years, and you've paid interest on that loan for those two years. Think about it like this: Do you think they should have lent you that money interest free for two years? .........................).

Many thanks...it makes sense to me now. I will sell the flat after 3 years i.e ausgust 2007 to avoid the £4k redemtion fee.

Lets hope the flat has gone up by least a few grand!!! :-)

MyUserNamesTaken

pre-reg wrote:

Many thanks...it makes sense to me now. I will sell the flat after 3 years i.e ausgust 2007 to avoid the £4k redemtion fee.

Lets hope the flat has gone up by least a few grand!!! :-)

I think your flat will have increased in value, even if it's only a small increase. Still, think of it as being cheaper than paying rent.