Going back to Uni-remortgage advice

liverlass

Not sure what to do. I am going back to Uni in Sept and my mortgage is due up now so want to renew before i start. I need to get my mortgage as low as poss, obviously, as money will be tight. I am doing an NHS course so will get a small bursary. Do you think it would be worth getting an interest only mortgage, just for the 3 years? Husband suggested maybe extending the term of the mortgage (currently down to 15) but I really don't want to do that because I know with the best of intentions we will probably never have the money to cut it back again.
So is an interest only a good idea or am i best just looking for the lowest possible deal and fixing it for 3 years. I really need to cut costs!

Help!

Annisele

I'm a bit confused - you won't consider increasing the term of your mortgage, but you will consider going interest only (effectively increasing the term to an infinite length)?

Your lender won't necessarily agree to interest only. What's your LTV, how much is outstanding, what will your joint income be come September, what's your current rate, until when, and are there any early repayment charges?

liverlass

Annisele wrote: »

I'm a bit confused - you won't consider increasing the term of your mortgage, but you will consider going interest only (effectively increasing the term to an infinite length)?

Your lender won't necessarily agree to interest only. What's your LTV, how much is outstanding, what will your joint income be come September, what's your current rate, until when, and are there any early repayment charges?

I don't really understand interest only, hence asking for the advice!! I would only go interest only for the 3 years I was in Uni, just thinking of ways to cut spending while there. We have 15 years left on the mortgage at the moment. Our joint income will only be about 28k while I am studying. Our current mortgage deal ended in May, therefore no repayment charges. We have 49k outstanding, so I know compared to many we have a small mortgage, but when we are about to drastically reduce our income so I can follow my dream, I need to make life as easy as possible on the whole family.

beecher2

I'd advise going onto the Debt Free Wannabee forums and posting a Statement of Affairs based on what you will be earning while you are studying. A 28k income with 49k mortgage shouldn't be unmanagable and the posters there will help you cut back on expenditure elsewhere.

Annisele

I'd second beecher2's suggestion.

The reason I thought it was odd that you'd consider going interest only was that you said "Husband suggested maybe extending the term of the mortgage (currently down to 15) but I really don't want to do that because I know with the best of intentions we will probably never have the money to cut it back again".

Interest only just means that you only pay the interest on your mortgage. Repayment over 15 years means that over 15 years you slowly repay the capital; repayment over 25 years means that you repay the capital over 25 years - and interest only means that you never repay the capital (unless you have some external means of repaying, such as an endowment policy, or you just sell the house).

If you're concerned that, once you've extended the term, you won't have the money to reduce it again - aren't you also concerned that once you've switched to interest only you won't have the money to go back to repayment?

You can play around with the BBC's mortgage calculator to see an estimate of what difference it makes to change the term and the interest rate.

With an income of 28k, I'd try to leave the mortgage as it is if at all possible.

liverlass

Ok guys,

Thanks for the advice, much appreciated.

Debt_Free_Dreamer

Have you considered upping your income.

My OH trained as a nurse, he started just over 6 years ago and during that time he worked on for the bank agency staff as a Care Assistant. This also helped with his studies as it was more practical experience during the weekends.

Your local health authority should have a agency for it's bank staff. You bascially check which shifts are available and work to fit around your studies.

Lots of my OH colleagues at Uni did the same during their studies.