endowment for my interest only mortgage

bignanjo

need some advice guys. have had considerable hardship over the last few years and have been paying an interest only mortgage without paying into an endowment or whatever i should be to build up the funds to repay the initial loan at the end of the term... i know, stupid!!!!
anyway, can anyone help me as im really not sure what product i need and whether endowments for this purpose are still around after all the bad press of recent years. worried that if i dont do something about it very soon (got 20 years to find £90,000), the mortgage company will be looking for their cash and i will have to sell in order to pay them... leaving hubby and i in our fities with nothing!!! any advice would be gratefully recieved. Due to bad credit rating and other silly mistakes remortgaging isnt an option at this point in time.

hillcats

can you get mortgage onto repayment / start making additional payments (plus overpayment) to lender stating this is to clear capital owed.

bignanjo

have a bad credit history and dont think at this point in time we would be able to secure a different mortgage. although i will give lender a call to enquire about a change. will try tomorrow and see what they can do to help.

Wh05apk

Endowments arenow dead, the replacement really be equity ISA's but these are now considered high risk, and so you would be best to switch to repay, or overpay.

If you do switch it is likely the lender will charge a small fee, you would then be committed to the additional payments, personally I would find out the difference between int only and repayment, and then pay the additional amount by standing order, that way you maintain flexibility, but are reducing your mortgage balance.

magpiecottage

Wh05apk wrote: »

personally I would find out the difference between int only and repayment, and then pay the additional amount by standing order, that way you maintain flexibility, but are reducing your mortgage balance.

Use an OpenOffice spreadsheet.

In cell A1 put in the amount outstanding on the mortgage
In cell A2 put in the current interest rate (remember to type the "%") afterwards
In cell A3 put in the number of months (not years) left.
In cell A4 type "=pmt(A2/12;A3;A1)*-1"

For an Excel spreadsheet, it is exactly the same but you need commas not semicolons in cell A4.

That gives you the total amount you need to pay each month.

If the interest rate changes, you will need to rerun the calculation changing both the outstanding balance (because you have paid some off) and the interest rate - and of course there will be less months left. You can't just maintain the extra payment because the rate at which the capital is paid off varies with the interest rate.

Thrugelmir

bignanjo wrote: »

have a bad credit history and dont think at this point in time we would be able to secure a different mortgage. although i will give lender a call to enquire about a change. will try tomorrow and see what they can do to help.

Changing your mortgage terms does not require a new mortgage. Your lender will no doubt be happy to facilitate repayment of the debt.

bignanjo

thanks guys for the advice. will give these things a try and see, i like the idea of remaining flexible as my job is not permenant at the moment and would hate to be tied into something incase i cant get permenant work. ill try out the spreadsheet and see how it works out... not that im very good woith them. lol really appreciate your input guys cheers. ill let you know how i get on.

Thrugelmir

bignanjo wrote: »

thanks guys for the advice. will give these things a try and see, i like the idea of remaining flexible as my job is not permenant at the moment and would hate to be tied into something incase i cant get permenant work. ill try out the spreadsheet and see how it works out... not that im very good woith them. lol really appreciate your input guys cheers. ill let you know how i get on.

Pay a visit to the Debt Free Wannabe board. Plenty of advice and support. Saving money can become addictive so give it a try.