Interest free mortgages

Alexmc12

I wonder whether anyone can advise me.
I live in a £200,000 house. I have a £104,000 mortgage + £26,000 of other debt (credit cards (all at 0%) and a loan). I also own a property outright in France, that I intend moving to in about 10 years time. I currently struggle to make ends meet - with almost £1,500 a month outgoings on my mortgage and other debts.
What would anyone's advice be about the following proposition?:
I switch to an interest only mortgage, clumping all my debts together
(£130,000) and pay only £540 per month in interest payments (assuming interest at 5%) for the next 10 years - sell my UK house - pay off the £130,000, leaving me £70,000, +/- any appreciation, to take away with me.
Is this possible to do? Even without having to set up an investment to run alongside?
Admittedly I would basically be paying rent on the property to my mortgage lender for 10 years, but the quality of life I can achieve by increasing my monthly disposable income by nearly £1,000 seems too tempting to me.
Tell me what you think...
Alex

herbiesjp

You can indeed to what you are proposing.

There are several lenders that will accept that the sale proceeds from the property would in fact be used to clear the outstanding debt.

Tallymanjohn

Personally I would go for it, hopefully house prices will increase over the period which would balance out some of the extra you pay because the capital isn't reducing. As you definitely intend to clear it & still have a house to live in at then end of the period then it sounds a sensible thing to do. Now you just have to convince (1) a lender, that they have the security, which shouldn't be a problem & (2) the taxman, as you may have to establish which is your main property or you may well get stung for CGT - might be worth consulting a tax specialist over this bit.

MortgageMamma

How old are you? Have you thought about switching to part capital repayment part interest only basis? You could also keep it 100% capital repayment and extend the term of the mortgage if you are young enough. Who is your mortgage with? Is it competitive?

kenshaz

Get mortgage advice for free. As mortgage advice is only paid for when you complete the mortgage,a broker simply telling you it's pick doesn't incur a fee.As best practice always get more than one opinion,speak to three or four brokers then complete via L&C .this way best advice and no fee.
London & COUNTRY 0800 9530304

www.charcolonline.co.uk tel 0800718191

Chase de Vere mortgages 0800 3585533

FPD SAVILLS 0870 3585533( personally I do not use 0870 numbers ,because the rate is unknown)

Alexmc12

I'm 38, married with 3 kids - my wife works (P/T) also. Mortgage is with Abbey, currently tied into Feb '07 with BoE + 0.44% tracker/repayment mortgage with 18 years to run. I take your point about extending my mortgage, but even if I extend it over 25 years, it will still cost £760/month. That'll cost me an extra £26,400 over 10 years, money that I could do with now. In any case I'm lucky enough to own a second property, so it's not imperative that I pay this mortgage off as I intend selling it in 10 years and taking the profit with me.

kenshaz

Extending your mortgage is expensive,and will not help the situation,with the second property you are in a favorable position.Contact the brokers ,I listed,see what they can offer.
Also consider the redemption penalty,just need to get your monthly out=goings down ,also factor into your thoughts the recent rise in interest rates and future moves.

Rebob

Consider switching to an interest only mortgage but make sure that capital payments are allowed so you can pay what you can afford each month.

HTH

liz.._4

could you rent out the property in France?

jennifernil

I don't see that the taxman will be interested. The OP is living in the house in the UK that he intends to sell in 10 years time, the other house will then become his home. It is in France, so he will be leaving UK and becoming a French taxpayer at that point. UK taxman would only be interested if he were to sell the French house while still living here.

homer_j_3

kenshaz wrote:

Get mortgage advice for free. As mortgage advice is only paid for when you complete the mortgage,a broker simply telling you it's pick doesn't incur a fee.As best practice always get more than one opinion,speak to three or four brokers then complete via L&C .this way best advice and no fee.
London & COUNTRY 0800 9530304

www.charcolonline.co.uk tel 0800718191

Chase de Vere mortgages 0800 3585533

FPD SAVILLS 0870 3585533( personally I do not use 0870 numbers ,because the rate is unknown)

:mad:

To the OP - you should seek whole of market advice and yes you should look for one that is fee free.

I would not however recommend the above in terms of ringing 3 or 4 different brokers because you could end up with 3 or 4 different options and you could become more confused than you need to be. These options will not be because one adviser is giving you better or worse advice than the other but it could be that either they have exclusive deals or different opinions of certain lenders due to bad service for example.

Just to try and put another way if its not clear - You have been given charcoles online as a broker to use and they are operate from a panel of at leat 36 lenders so it also could be that L&C have access to a lender that Charcols are not using or that Charcol have an exclusive that L&C cannot access. By doing the above you could confuse the matter and lose all faith in using a broker full stop.

You need to clealry find a broker you trust and if you cannot get local recommendation then the brokers that are quoted above are all reputable companies but have different ways of working, which may not suit you. In fact, I am not sure all of them are fee free - could be wrong though?

If you want to sit down with someone, ask friends/family/colleagues for recommendations as you will know exactly what you are getting involved with that way.