We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Interest only mortgage
Options

willows18
Posts: 4 Newbie
We switched to an interest only mortgage a few months ago. Our mortgage lender agreed to it for 6 months and then it would be under review. Our situtation is unlikely to change for the better for sometime so we will be stuck on interest only for a while yet (probably until I can go back to full time work when my youngest starts secondary school in 4 years).
My question is can our Mortgage lender just decide at anytime that we need to start paying back the capital again and take us off interest only?
My question is can our Mortgage lender just decide at anytime that we need to start paying back the capital again and take us off interest only?
0
Comments
-
Contact your lender and they will let you know.0
-
good question, one that i should be asking also as im on interest only and thats how it was taken out, currently sitting on my lenders svr. i would also like to know what the likelihood is for a lender changing it to repayments. the OP had it on repayments and changed to interest only whereas mines was interest only to begin with. awaiting more replies...0
-
Your lender will be fine changing to repayment (may be an admin fee) - it's only the other way round that's an issue as it represents higher risk to the lender.0
-
Why not try to make some overpayment even if it is small at least they can see you are doing something whilst your circumstances have changed.0
-
We can't make any overpayment as we are on our absolute limit at the moment anyway. Our mortgage has just gone up 350.00 per month even on interest only. Our current lender had a pledge that their svr wouldn't go more than 2% above the base rate unless there were exceptional circumstances. They have envoked those exceptional circumstances due to the recession and put our mortgage up 1.5% from 1st March. So we are well and truly stuck, if they insist on taking us off interest only we will have to sell the house.0
-
Realistically then perhaps you would be better off selling?0
-
If you can't cope with an SVR of around 5%, what will you do when it goes up? It is unlikely to stay so low for the next 4 years. Selling up might be your only realistic option if things are so bad.0
-
Hi,
Not sure about the specific of the IO mortgage but I think it's sensible to start having a plan for the future with lower income. IR are at the lowest historically, inflation is likely to rise so all of our household bills will be going up. Since you can see the challenge ahead it's worth considering what are the options.
What will happen if you have to switch back to repayment - how likely is the that (check with Bank). Can you lower current bills?(debt free wannabe site wll be a help). Can you increase current income?
What is the house valued at? Can you trade down?
Just a few things to think through - always best to have some thoughts incase your mortgage payments do go up.0 -
Take action now.
The lender does not have to take IO for ever, but if you can pay it they may leave it a bit longer. One day you will have to to face up to it though.
If you cant afford the mortgage at rates like that then you best sell while you can."Banking establishments are more dangerous than standing armies." Thomas Jefferson
"How can I believe in God when just last week I got my tongue caught in the roller of an electric typewriter?" Woody Allen
Debt Apr 2010 £00
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 350.9K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.6K Spending & Discounts
- 243.9K Work, Benefits & Business
- 598.8K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards