Interest Only Mortgage Query

Dan_1976

We should all learn someting new everyday, just something not as dull as mortgages! Come on Bungle, get out there and learn learn learn!! lol

JimmyTheWig

OP, are you happy?
Do you understand what has happened?
Do you agree, now, with the bank?

picardygirl

Just wanted to say, we have part interest and part repayment, all together in one fixed product til Sept 2011. Last summer we wanted to change the whole lot to repayment, but was advised by the mortgage company to just overpay (the equivalent of what would be a full repayment mortgage, but allocate the overpayment to the interest only portion of the mortgage). Otherwise they would have charged us £75 to change the paperwork, so we put the £75 towards an overpayment.

So, we now overpay to make it "like" a repayment mortgage, plus a little extra, not a lot, but every little helps. Then when our deal expires next year we will remortgage with a repayment mortgage only.

Dan_1976

This is good picardygirl, gives you flexibility, although if you are not good with money you are better to change to repayment.

megarchie

Boozer wrote: »

Did the person who you took the mortgage out with not explain that you would need some other investment to pay off the loan after the 15 year term is up???

Why did you take 15 years instead of 25???

On the bright side, you have discovered it now, if you had let it run the term and then realised, you would be in even more trouble.

Wow! So many of you joining in my debate. Imagine what fun we could have if we were all in my local together sipping some superb real ale!!!

To answer the above queries from Boozer:
1. There is a possible inheritance within the next 20years.
2. I would then be of pensionable age so 15 yrs was more feasible than 25
3. I haven't just discovered anything NOW. There was no danger of me going the full term and then suddenly finding out that I had the full capital to pay. I do know what an interest only mortgage is. Does anyone really think that a building society is going to lend me £235,000 without me knowing the consequences?

And yes I was able, on my interest only mortgage, to change part of it to capital repayment. I quite simply asked how much do I have to now pay you per month to reduce the £235,000 to £99,000 at the end of the term. It was that simple. I was even given the figure per month to totally repay the mortgage.

The only naivety I have shown is that I did think that when renegotiating the mortgage, the £50,000 I had paid in interest only payments for 4 years paid no part in recalculating the remaining monies owed.

Boozer

megarchie wrote: »

Imagine what fun we could have if we were all in my local together sipping some superb real ale!!!
.

Where is your local? i am quite partial to a pint now and again:D

Dan_1976

I could murder a pint!

kai666

your interest only mortgage is for 15 years, but you might have an inheritance within 20?

Does anyone else see a slight flaw in this?

megarchie

kai666 wrote: »

your interest only mortgage is for 15 years, but you might have an inheritance within 20?

Does anyone else see a slight flaw in this?

You are extremely vigilant to see that there is a flaw here but when our youngest leaves university we will have more "disposable" income to be able to make up to £500 overpayments per month, which will reduce the eventual £99,000 payment, plus we will have retirement lump sums to help us in an emergency, plus, as our house is at present close to £600,000 in value we could always sell and downsize to pay off the deficit. We are, therefore, close to covering any eventualities.

I'm gasping for a pint!

somethingcorporate

megarchie wrote: »

3. I haven't just discovered anything NOW. There was no danger of me going the full term and then suddenly finding out that I had the full capital to pay. I do know what an interest only mortgage is. Does anyone really think that a building society is going to lend me £235,000 without me knowing the consequences?

The only naivety I have shown is that I did think that when renegotiating the mortgage, the £50,000 I had paid in interest only payments for 4 years paid no part in recalculating the remaining monies owed.

Sorry but these two statements that you make do not correlate.

Either you know what interest only is - you just pay off the interest that the capital is accruing on a daily basis. Or you don't understand what it is and think that your interest only repayments would contribute to the capital owed (which your last point alludes to).

Maybe it's just me but I'm still not convinced you know what you are talking about...:eek: