morgage and loan help please

stopthespends

hi

last year me and ex split and i took on the house and morgage.....foolishly adding a secured loan on too! with the abbey

anyway...ive found out i can move the loan when i want....its for £7000,

morgage 82000, tied in til nov 4.94% repayment

at the mo i pay 538 a month for the 2 combined

spoke with abbey they have offered me...

flexiable morgage £89000 =4.99% = £542.12pm
£599 fee no tie ins and can make overpayments

interest only £89000 = 4.99% + £372.11pm
no fee, can make lump sum payments

OR

£82000 repayment = 498
interest only £341

the thing is i really need to reduce my payments each month, if i take the lower morgage ive got to get a loan at the right apr and i know that thats the right way to do it however the interest only is sooooo tempting as im £200 overdrawn each month....
but is interest only paying the never never?
please help i dont know what to do!

nrsql

One thing to think about - it is base rate + .49% so it will now be 5.24 not 4.99.
According to their web site that rate is only available to people moving to abbey but they may be letting you have it.

>> but is interest only paying the never never?
Yes, capital never reduces so the interest you pay is greater and have to pay it off sometime.