Switching from repayment to interest only ?

archey31

Can anyone advise me please... my husband and are I going to separate. I am planning on staying in the house with the kids and hopefully with my p/t income and tax credits, plus his maintenance I will cover the bills, mortgage etc. However our current mortgage rate is 2.5% and this is affordable. When however interest rates go up and we're talking an extra £150-200 per month it will be really hard to pay.

Would the mortgage company let me switch to interest only for a time in times of trouble? I know it's not ideal but don't want to lose the house by selling it and in 2 or 3 years time I can go back to full time employment, take on the mortgage and buy my husband out. Does this sound like a bad idea? I could clear the debt by taking on slightly higher mortgage, i.e. remortgage it.

House value is currently £180,000 and mortgage outstanding is £98,000.

Any advice in my really worrying time of trouble would be extremely gratefully received! Thanks

GMS

Speak to the lender and ask them if they will allow it. They are the only ones who can give you an accurate answer.

Will your husband cintinue to contribute to the mortgage as he will still be liable for the repayments until such time as he is removed from it?

shortchanged_2

I'm not a mortgage expert but there are some on here.

I would say in the current climate mortgage lenders are not very keen at all with IO mortgages UNLESS there is a proper repayment vehicle in place to pay off the capital at the end.

Speak to your mortgage provider, they may be sympathetic and give you a short period of interest only (bearing in mind it will eventually mean more capital to pay off in a shorter time so payments will eventually increase).

The other potential problem is you may not meet the affordibility requirements to pay the mortgage on your own if you remortgage.

archey31

Thanks for the advice, I will speak to the lender about it. It's not needed at the moment, we're talking when the rates rise back up to 5.5% and above. My husband will contribute - but we have a set amount, so if it goes up he can't afford to give me any more money as he will have his own rent to pay, he's not a high earner plus he's self employed. Will just have to see how it goes I suppose and keep everything crossed it remains stable! At some point in the future I will earn enough to cover the affordability requirements as I'll go back to my career I had before the kids so the earnings were good. If all else fails will have to do it sooner rather than later and put the kids in out of school clubs and full time childcare (wanted to avoid that they are only 2 and 6). Thanks again

Thrugelmir

Consult a solicitor and have the agreement formalised.

Should be possible for your husband to retain an interest in the property until the children have left full time education.

The court will put the welfare of the children first.