Switching to interest only- a positive or negative move?

ferry

Basically after being made redundant in july and with the new year we've looked at all our outgoing finances.
Just curious to know how asking our mortgage provider-in our case Nationwide-would view an enquiry from us about transferring to an interest only product.
It would only be an enquiry at the moment as able to meet the mortgage payments for some time.
Would it be seen as a positive move that we're trying to sort out or finances or a negtaive one that there could be financial trouble on the way?

I want to add that I'm lucky enough to be starting a new job next Monday and I hope this will be a bit of a fresh start for us but its on a much lower wage and will take some time to 'get back on our feet' financially ...but at least it's a start.
In view of the events of the last 6 months and as anyone in our position will know our finances have taken a battering..

The idea is to go on an interest only mortgage initially and overpay by about 5% monthly until we're in a better financial position.

I know every case is different and this probably wont be an issue for around the next 6 months as I hope the new job will take off!

Any opinions welcome and I appreciate any thoughts,advice etc

Regards
Ferry

Peelerfart

Hi ferry,
and congratulation on at least finding a job even if it isnt quite what you want.
Did you make Nationwide aware of your redundancy ?

hcb42

perhaps you should see if you can have a payment holiday for a few months to get back on your feet. If you go interest only, you then need to show a mechanism to be able to pay the capital, I dont think a voluntary overpayment would cut that....

originalmiscellany

interest only for us will be great - greater flexibility to pay when and how we want.
However in this case, I think the initial need for you is to check you've told your bank you've been unemployed and ask for a payment holiday to get your finances back in check. Once you've shown your finances are on track and have a repayment vehicle in place, then yes, by all means ask for an interest only mortgage.

ferry

Brilliant advice as usual.
I have to say that our mortgage broker got into contact finally with us to say that the swap to an interst only mortagge shoudl only be looked at as a very last resort.

Assuming that we can get a payment break does anyone know if we can get back on to a the repayment type mortgage that we have now and will it cost us any extra or do we simply 'catch up at the end'
if you see what I mean!


Just trying to think about all our options here.

Cheers again
Ferry

ferry

Peelerfart wrote: »

Hi ferry,
and congratulation on at least finding a job even if it isnt quite what you want.
Did you make Nationwide aware of your redundancy ?

To be honest -no.
I thought that I would be back in employment sooner than I thought and I didn't want to send out any alarm bells.....

dimbo61

First of all you do not want a payment holiday as that is worse than going Interest only as your mortgage debt increases.
Your LTV and age plus other factors would be taken into account when you speak to your lender about going IO for a period of time 12 months!
If you are on a good deal now then try and avoid losing this rate and look at cutting back on other things

beecher2

Is asking to lengthen the term an option you could look at? I agree that going interest only/asking for a payment holiday should be a very last resort.