want to go onto interest only...

mstar

HI everyone,

I have a self-cert mortgage and I have come to the end of my mortgage discount period. My wife has been made redundant (since last year) and i wanted to save some money for a rainy day and build up our savings again/deposit for a new house as we like to move in 2-5 years time.

I telephoned my lender to switch to interest only and i got told i have to go through their
Financial adviser and do an income/expenditure analysis. Problem is i have a good paying job and
can afford (just about) my wife not being in a job. I am scared they will say i cannot
go to interest only which will hurt our future plans.

Is this a case where my lender is just doing there part as they think i maybe in hardship etc?
or they want customers to pay the capital as my lender is a lender who was part of the banking crisis?

anybody provide any help, how i should proceed? can they stop me going to interest only?
or do they need full bank statements etc etc and then decide if they give me interest only, based on my income/expenditure etc?

Thrugelmir

mstar wrote: »

HI everyone,

I have a self-cert mortgage and I have come to the end of my mortgage discount period. My wife has been made redundant (since last year) and i wanted to save some money for a rainy day and build up our savings again/deposit for a new house as we like to move in 2-5 years time.

I telephoned my lender to switch to interest only and i got told i have to go through their
Financial adviser and do an income/expenditure analysis. Problem is i have a good paying job and
can afford (just about) my wife not being in a job. I am scared they will say i cannot
go to interest only which will hurt our future plans.

Is this a case where my lender is just doing there part as they think i maybe in hardship etc?
or they want customers to pay the capital as my lender is a lender who was part of the banking crisis?

anybody provide any help, how i should proceed? can they stop me going to interest only?
or do they need full bank statements etc etc and then decide if they give me interest only, based on my income/expenditure etc?

Why do you want to switch to an interest only mortgage if your intention is to save up to move house? Why would it hurt your future plans?

mstar

not so much to sell up but get enough deposit (e.g 40%) so i can get a mortgage.

I suppose is it unheard of to say i want to pay capital but maybe say instead of paying £1200 (capital+interest) say i am happy to pay £600? (so paying a bit of the capital balance as well?)

happybroker

Be careful of them sending some one out to do an income and expenditure analsys...this often happens when people are in difficulty and a nice fat fee gets added to the mortgage balance.

Saving toward a deposit or paying down the balance of the mortgage to increase your equity? 6 of one, half a dozen of the other to a degree.

Thrugelmir

mstar wrote: »

not so much to sell up but get enough deposit (e.g 40%) so i can get a mortgage.

I suppose is it unheard of to say i want to pay capital but maybe say instead of paying £1200 (capital+interest) say i am happy to pay £600? (so paying a bit of the capital balance as well?)

What interest rate is your mortgage?

mstar

2.39% is my rate at the moment

redpete

mstar wrote: »

not so much to sell up but get enough deposit (e.g 40%) so i can get a mortgage.

I think you're missing something. Let's assume that you move to IO and put every pound you save on the monthly payments into a savings account. After a few years you might have saved £5000 but your outstanding mortgage balance will be £5000 higher than if you had stayed on a repayment basis. The net difference in the amount you have available for a new deposit is £0. This could be worthwhile if you get significantly higher interest on your savings than you payon your mortgage.

I suppose is it unheard of to say i want to pay capital but maybe say instead of paying £1200 (capital+interest) say i am happy to pay £600? (so paying a bit of the capital balance as well?)

People do have split mortgages with some on interest only and some on repayment, I've no idea how easy these are to get though.

If you do change then beware of any fees that might be charged.

tom_lloyd_2

Actually the mortgage will be higher than £5k more due to compounding of interest. i.e. if you are paying 10% a year on 100 but not repaying capital in yr 2 you will pay 10% on 110, etc. So you will be better off financially if you go for capital repayment.

If you are really keen on IO and your lender lets you, could you open a mortgage deposit account. Basically like offset a savings account that earns no interest but offsets against your mortgage and from which you can make instatnt withdrawals. I have this on my mortgage allowing me to make "effective" overpayments but safe in the knowledge I can withdraw at any time.

mstar

thanks ppl,

i guess it comes down to me wanting to have enough money in my pot to make sure
i can support myself if things go wrong (i lose my job too etc) i want to build
up my savings, possible new baby on the way etc.

not sure why they need to ask so much questions, never had this problem before.

VIGILANT22

mstar wrote: »

not sure why they need to ask so much questions, never had this problem before.

:T..Could have something to do with the fact you have borrowed their money!

Blackpool_Saver

is this the rental property?