interest only mortgage

Euphoria1z

Snippa wrote: »

Why don't you take it over a longer term now - say 30 or 40 years - and make it repayment? That way you're at least starting to repay the capital, and taking down the interest.

An I/O mortgage is dead money - it's just renting from the bank. You have a massive debt you're paying a lot of interest on, and never bringing down. It's backed by an asset that might increase, might decrease, might cost you a fortune. Also, interest rates could easily rise much higher, especially over the longer term, and if you're not reducing the debt, that's going to hit you massively.

Have you tried sticking various figures into mortgage calculators to get a feel for exactly how much you're going to cost yourself over 25 years of interest only?

as it happens yes!!! and its horrifying to find out that i will end up paying more than the actual purchase price of the property over 25 yrs interest only!

but as is life, i literally cant afford the repayment, im a low wage earner (call centre) and the only wage earner in my family. My mistake was to obviously purchase a property that i cant afford, but back then i was getting great over time, prices were on the up, and had actually banked on my overtime to continue and price rises etc etc etc (silly i know). even in those conditions i was over stretching myself.

the flat itself is great, in great location, close to a major city and a university. i would rather rent my flat out than to sell it in this current decade.

my question, was to find out if i can still continue to get an interest only mortgage, and if so, what kind of LTV are we looking at?

beecher2

You say you overstretched yourself - how does your salary to mortgage multiple stack up as that may have an impact on what deals you can get, interest only or repayment.

Euphoria1z

beecher2 wrote: »

You say you overstretched yourself - how does your salary to mortgage multiple stack up as that may have an impact on what deals you can get, interest only or repayment.

it doesnt stack up too well im afraid.

outstanding balance is 145K, i earn 17k from one job and 7k from another. so just under 24k gross. so even x5 my salary its 125k.

i do have 10k a yr gross rental income that could be put towards it but i dont think that gets accepted.?

ive not spoken to any brokers yet, im just waiting for the rates to start rising before i start making enquiries about a remortgage as im on a svr. no much point trying now if i dont meet the criteria. when the rates rise i will see what the situation is, what my broker can do (as hes pretty good).

else will just stay on svr for as long as i can i spose.

TrickyDicky

If you're only willing to pay interest only, why not rent and get a better house instead? Its the same difference, at the end of 25 years you dont own a house and it cost you a hell of a lot of money, but with the renting option the landord is responsible for keeping up repairs on the property, not you - so loads saved there.

JA1000

£34K Income and £145k mortgage isn't struggling but I don't understand what the £10k rental income is from/

You have another property?

getmore4less

The problem with a lifetime interest only plan is that you need to show an income beyond retirement.

An index linked pension would do this.

Without this lenders will be very reluctant to give terms beyond 65(ish).

VIGILANT22

JA1000 wrote: »

£34K Income and £145k mortgage isn't struggling but I don't understand what the £10k rental income is from/

You have another property?

post 7 i have a buy to let that i would use

VIGILANT22

[QUOTE=Euphoria1z

i do have 10k a yr gross rental income that could be put towards it but i dont think that gets accepted.?QUOTE]

Yes it does count, as does taking the btl mortgage into the equation

Dan_1976

Your not the only person to have made choices based on the economy being nothing like it is today. It is part of house buying, it can be risky.

But, I dont think its that bad. You either sell and rent as already said or you keep going.

Good luck