Repayment to interest payments

hullupelle

Hi all,

My 1st post!

I have a fixed rate repayment mortgage ending 30th April 2010 and it would automatically switch to the lenders SVR in May. However, I would like to switch to Interest Payment only on it's SVR and was wondering if it is possible or would the lender require it to stay on repayment at SVR rates?

For your information, there are no extended tie-ins after 30th April, so I think it's possible. Please enlighten.

Thanks.

opinions4u

The rate issue and the interest only issue should be treated separately. A lender is not automatically obliged to allow you to go on to an interest only basis and there are many good reasons for you not to do so.

What's you current rate and what will your SVR be? Will this not deliver a reduction in payment anyway? How much do you owe and what's the property worth?

The big question for me is "Why do you want to go on to interest only?".

hullupelle

Current fixed rate is super high at 6.09% of repayments at £972 a month. I have calculated that I can save more if I pay interest only at rates up to 5% and then use the difference to set up a low risk investment vehicle over the same term. For me this is better than repayment.

So anyone know of good interest only SVR's?

_Andy_

You're assuming your lender will agree to it. This will depend on the LTV.

_Andy_

PS no lender will take on new business at an SVR rate.

Gorgeous_George

Remember, your investments need to be 25% more than your mortgage rate (assuming that you are a basic rate tax payer). So, with a 5% mortgage you need to earn 6.25% before you are up on the deal.

Low risk investment vehicles rarely pay 2 or 3 times the rate of inflation.

GG

getmore4less

hullupelle wrote: »

Current fixed rate is super high at 6.09% of repayments at £972 a month. I have calculated that I can save more if I pay interest only at rates up to 5% and then use the difference to set up a low risk investment vehicle over the same term. For me this is better than repayment.

So anyone know of good interest only SVR's?

More info please, I would love to find low risk with 5%+ returns now that will still be above mortgage rates long term.