end of interest only mortgage

Scrooge80

Hi, my Homestart mortgage (interest only) is about revert to capital repayment in April 2010, at which point the 3 year fixed interest rate will end, which at the time was 6.69%. when purchasing the property i put down a 5% deposit, but this was pretty much at the hight of the property boom. i have not yet made an appointment to see my bank and discuss any possible deals in April but i do have 2 questions you may be able to help with

1. When April 2010 comes will the rate automatically drop to the variable rate on offer by the bank or not or can they hold it at 6.69% even though the 3 years are over?

2. if i want to remortgage with them will i need to make a large payment off the mortgage or should they offer me a better rate without an additional down payment?

the property when bought was valued at 80k and 4k depositi was put down.

Conrad

1. - will usualy revert to variable but of course your original mortgage offer will illuminate the situation

2. - 'should they offer me a better rate without any capital reduction'? No, there is no legal reason they have to. The rates lenders offer broadly reflect the risk of the underlying asset. So an asset with a 50% mortgage is much less risky than one with little equity margin - because if they have to repossess, the one with little equity will cause a big loss to the lender once court fees, baliffs costs, repairs, maintenance, locksmiths etc are paid for and the property sold propbably for a low amount to a cash buyer.

_Andy_

If you ring HSBC nearer the time they will advise what rates may be available.
The rate will be there SVR, whatever that may be next year.