Intrest free and riseing every 3 months

[Deleted User]

I have a mortage which is on intrest free only but am in negtive equity. Peoblem is future mortages keep rasing the rates up every 3 month. So really i want to move away from them to another lender that can give me fixed rate and i can affored 800pm at the mo easily. Im worried that when the bank of england does increase the rates they gonna keep adding extra rates on top. At the moment im 15k in negtive equity so cant really move to another lender. Future says they are not doing fixed rate and would go on repayment plan but worried the intrest might go stupid high like it did in the 90s, any help would be appreated. Just want to know what other option are out there like eg get a loan to use as 15% deposit etc

Thrugelmir

The best way of tackling negative equity on an interest only mortgage is stay put. Reduce all non essential expenditure and use this to repay the capital balance owing.

There is little point in worrying about interest rates might be. At the moment they are very low. So take the opportunity to reduce your mortgage.

Every pound that you reduce your mortgage by will reduce the amount that it will increase if interest rates rise.

My comments are on the assumption you can afford your existing mortgage.

While it may seem a daunting task over time the situation will improve.

[Deleted User]

Thank for your reply... At the moment I have 1k spare a month... Don't want to put All on as saving for wedding so me and g/f agree to save 600 amonth to repay toward the mortage!! What the best way to do this!! Save money in the bank and pay a lump of let say every 12 months which will be 7.5k!! Mortage is 128k flat worth 114k (want to pay some of to get it Off so I can get into postive equity as don't think it gonna get back to what I paid for it for at least 5years) intresst at mo stands at 3.2%. thank again for ur advice just want to go the best way on paying much as I can back and get meself back in the green...

Thrugelmir

The interest on the majority of mortgages is calculated monthly. So the true annual interest rate will be higher than the 3.2% you quote.

You'll need to check with your lender if there is a restriction on how much you can repay every month. As paying the money directly into the mortgage is a good discipline.

Interest rates over time will rise from where they are now. So you are unlikely to better your mortgage rate by putting money into an instant access savings account.

Personally I would defer the wedding by a few months and make a significant reduction in the mortgage instead. The excitement of wedding day will soon be forgotten with the drudgery of repaying negative equity hanging over your heads. Make the challenge to clear it before you get married. Then you can have a real celebration. Having a clear objective focuses the mind!

ginvzt

Iain79 wrote: »

I have a mortage which is on intrest free only but am in negtive equity. Peoblem is future mortages keep rasing the rates up every 3 month. So really i want to move away from them to another lender that can give me fixed rate and i can affored 800pm at the mo easily. Im worried that when the bank of england does increase the rates they gonna keep adding extra rates on top. At the moment im 15k in negtive equity so cant really move to another lender. Future says they are not doing fixed rate and would go on repayment plan but worried the intrest might go stupid high like it did in the 90s, any help would be appreated. Just want to know what other option are out there like eg get a loan to use as 15% deposit etc

First of all - it is not interest FREE, but interest ONLY.