Moving to interest only

dunstonh

What reason would they have to stop me moving? I know they would like to ensure that a repayment vehicle is in place but on what basis could they refuse it?

The FSA has told lenders to make sure repayment vehicles are in place and not to use interest only as an excuse to fund a property purchase. Some lenders have withdrawn interest only to new customers. Others will insist on seeing the documentation. Others do very littel.

Thrugelmir

Leon_W wrote: »

You are all going on about risk to the lender. Where ? There is no risk in this case.

It's pretty simple. If Bob fails to make payments the lender will sell his house and get its' money back. The only one taking a risk is Bob, who is, I presume, a fully grown adult that has weighed up the pros and cons.

In cases like this I think it's generally a smoke screen by the lender to charge a fee, jack the rate, or do both.

How can you assess the risk without financial data? Company accounts and financial forecasts etc. Underwriters look at cases on the facts not on speculation.

Maybe the lender wishes to reduce the possibility of having the hassle and administrative expense of selling a property to recoup its debt.

Bob_Jones_2

VIGILANT22 wrote: »

Increase borrowing....decrease payments.....

"Going on about risk"!.... "get a new project off the ground".....

and if the new project doesn't get off the ground??

I can go back to a repayment mortgage??

VIGILANT22 wrote: »

Just exactly whose money is being used here?...Don't they have a right to do a risk assessment?

Um, mine.

VIGILANT22 wrote: »

It costs lenders more money to repossess than it does to carry out a risk assessment/responsible lending.

True. But who benefits most from the checks? Them from a risk perspective or them from a compliance perspective?

VIGILANT22 wrote: »

When are people going to realise they are borrowing at the discretion of the lender!

The lender can do what they like, we all know that. I think you missed the point.

Bob_Jones_2

I think a couple of you have missed the original point, or maybe I wasnt clear.

On what basis could a lender to refuse to revert a repayment mortgage to interest only?

VIGILANT22

Quote: VIGILANT22
Just exactly whose money is being used here?...Don't they have a right to do a risk assessment?

Um, mine.

Explain how it is your money??

Leon_W

Thrugelmir

" How can you assess the risk without financial data? Company accounts and financial forecasts etc. Underwriters look at cases on the facts not on speculation. "

The underwriters can consider all the facts they like. It makes not one jot of difference as Bob has the money already.

Repossession costs are bourne by the borrower BTW.

VIGILANT22

Quote: I want to reduce the amount

I didn't miss any point!!

Thrugelmir

Bob_Jones wrote: »

The lender can do what they like, we all know that. I think you missed the point.

Lenders aren't doing as they "like". As its the borrower that accepts the terms of the mortgage when making signing the mortgage offer.

Lenders want straightforward mortgages, where once taken out the majority require minimal supervision and administration. If people require a "flexible" product then that may come at a cost. As any profit made by lending the money disappears in costs. Something you will understand as a Co Director yourself when dealing with certain customers.

Leon_W

Yep Bob

Thrugelmirs correct that contracturally (sp?) you are signed up to a repayment mortgage and because it is you who wishes to change the terms the lender is allowed to pretty much do as it likes.

Bob_Jones_2

I am a director of a limited company and I currently get paid a salary. To preserve cash in the company I will reduce this salary by £1500 per month for approx 6 months. I am currently paying £1251 on a repayment mortgage with £200 being a voluntary overpayment. To reflect the fact that I will have a lower income I wish to reduce my mortgage payments to £610 (interest only).