Interest Only Morgages

Simonsays_2

I currently have a low rate (.79%) and therefore low payment to make on my interest only mortgage (Approx £200 pm. I couldn't afford a repayment mortgage at the moment but am worried about what my options are & what I should do at the end of the term which is approx 13 years away? I will still have the full amount to repay but if property prices continue to rise then all I would need to do is sell/move to repay the outstanding mortgage. The equity is currently half the current sale value. Rather than struggle to meet a repayment mortgage cost, I am in fact paying a low rent to live in the property. My question is should I struggle or carry on as I am? I do make and have a small savings pot which will reduce my outstanding morgage but only slightly! Look forward to any advice & hope this makes sense?
:j

Thrugelmir

What's your contingency plan if interest rates rise during the next 13 years?

HappyMJ

Do you owe £300,000? (300000*0.79%/12=197.50) Do you have an annual income of around £80,000? Are you really struggling to find £200 per month from that?

CloudCuckooLand

Depends if you will be happy to live in something/somewhere, at around half the value of the property.

For, as much as the place you live may rise in value, so will other places that you will presumably wish to buy at the end of 13 years, when you sell and downsize.

It may add up. Personally, I'd be happier with repayment, so I can pick when I have to downsize.

What if in 13 years, there's a fresh recession, the value is dented and not enough equity is released? Or you have lost your job and cannot remortgage?

With rates so low, you would do well either to overpay or save at a higher interest rate and overpay in a chunk (subject to the terms of your mortgage product).

dimbo61

We know very little about you ! outstanding mortgage ( is it £300K) income,age,savings, retirment plans ETC
You may in 13 years time wish to stay in your current property and unless you have built up savings or overpaid you will have to sell and downsize.
Now you have a great life time tracker ? and would be better to build up savings in cash ISA,s and regular savers rather than OP the mortgage but unless you want a poor retirement you should plan to clear the mortgage and have savings for your old age

InMyDreams

Simonsays wrote: »

I currently have a low rate (.79%) and therefore low payment to make on my interest only mortgage (Approx £200 pm. I couldn't afford a repayment mortgage at the moment...

Are you serious???

If you can't afford one now, when you are paying less than 1% interest, then when could you?

What were you paying when you took this mortgage out? What has changed?

Simonsays wrote: »

...but am worried about what my options are & what I should do at the end of the term which is approx 13 years away?

With all due respect, if you are struggling now, and have no idea how you are going to pay back your debt other than by selling your home, then I doubt very much that you will ever get to see the end of your term in 13 years time.

Simonsays wrote: »

Rather than struggle to meet a repayment mortgage cost, I am in fact paying a low rent to live in the property. My question is should I struggle or carry on as I am? I do make and have a small savings pot which will reduce my outstanding morgage but only slightly! Look forward to any advice & hope this makes sense?
:j

I think carrying on as you are is financial suicide, but a bit more information is needed to work out what's best to do from here.

poppy10_2

Didn't you pay off your mortgage in 2009?

hermanmunster_3

maybe he couldn't resist the available credit ? he was thinking about keeping the mortgage open.

Henry_P_Chester

poppy10 wrote: »

Didn't you pay off your mortgage in 2009?

Sounds like some serious MEWing over the last few years. I wonder what Simonsays spent the money on?

Simonsays_2

Thanks for all the replies and fyi my mortgage isn't £300K it's £215.

maninthestreet

Do you mean £215K? At 0.79% p.a, that equates to a monthly payment of only £142, interest only.