Some advice on Interest Only please, should it be switched to repayment?

PaulYates1983

Hi,
Firstly let me say thanks in advance for your input here, this board is a great resource! (oh and apologies for any typos!) :beer:

My mother had the right to buy on her council house back in 1996, the house (valued at around eighty thousand at the time) was bought through an interest only mortgage, initially with an endownment running along side it, this was quickly surrended. She now has a PEP, and a couple of Global gowth ISA's, and a managed income trust, these savings at this point amount to around eleven thousand. With fifteen years left on the mortgage. I didn't have an input in the setting up of the mortgage so don't know all details of how it was set up, and unfotunately my mother is far from organised with her paperwork, it is only now that I have been able to step in and have a look at this for her, the current rate on the mortgage is 6.59%, and her monthly payments are around £70.

Should use her savings now and pay the eleven thousand off, converting to a repayment mortgage with her current provider, (bearing in mind a very limited income and age for switching) which I would pressume would save on interest in the next fifteen years

or

Should she keep her money in investments and pay off the 18000 and the end of the term, hoping to gain 7000+ within the fifteen years.

Or if anyone else has some suggestions I am more than willing to listen! Oh and I'm getting an IFA as well to talk to on this one!

homer_j_3

There are a fair few points to consider here.

You would be best getting your mum to go to an IFA with mortgage authorisation because of the various investments in place.

Another option worth considering if money is tight is to put the mortgage on part & part, at a lower rate of interest, you may be able to pay a portion of the capital off and take some of the pressure of those investments having to attain x amount.

As I said, if you can seek professional advice then the IFA will be able to fully consider your circumstances, where we are currently unable to.

PaulYates1983

Thanks for the input, I am meeting with her IFA today, I will certainly look at the part and part argument with him as one option.