Mortgage Advice - Quick Question

youngqb

Hi,

Hoping someone can give me a quick steer....

First flat cost 62K in 2000, financed by 75% mortgage (interest only) plus endowment. Sold it in 2001 for 95K and moved to a house at £107k, with 85k mortgage and a further endowment to cover. So I have one mortgage and two endowments, all due to mature in 2025.

My question:

I'm not tied to a rate or my lender so would like to remortgage to reduce outgoings if poss for a couple of years. I dont think I have a massive concern over the endowments, I believe they're invested at 2-3% forecasts so I'm not holding out for massive growth on order to cover the loan. My question is rather about the loan, and what happens if I remortgage. Never having given it any thought at the time I took it out, but I presume if I now remortgage on another interest only deal, I'd have to look at a 19 year mortgage for the same amount if I still want to pay off on the original date ( I do.) Therefore should I presume that there'd be no benefit as presumably a 19 year mortgage at a lower attractive rate is probs still going to be more expensive (monthly) than my current 25 year loan at variable rate?

Any advice or thoughts appreciated.

Xbigman

As the loan is interest only, whether its a 19 or 25 year mortgage makes no difference to the payments. Because your endowments mature in 19 years you probably want to have a 19 year termination date for the loan.

If the new loan is bigger than the current one you could tie in the 2 endowments and then either have a third or have the loan as part repayment, just repaying that portion not secured by an endowment. In that case it does make a difference what termination date you have but its a pretty small amount. I'd just stick to 19 years and get a loan as flexible as possible. IE unlimited overpayments.
Regards



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