At the end of my fixed term....

quickben14

.....what are my options ?

I'm on a fixed term interest-only @ 7.45% (I know, I know....) which ends in 2014. Three years away, I know, but I'm not sure how these things work. I'm not sure what my LTV will be at that point, but I have a feeling that it will be more than 90%. How do I start paying a repayment on the same mortgage ? Can I even do it ? Do I need to re-apply ?

I'm really confused. What can I do in the meantime ?

Thank you for any advice.

kingstreet

Your mortgage will remain interest-only unless you do something to change it. At the end of the fix, your rate will revert to whatever is confirmed in your mortgage offer and key facts illustration. It may be the lender's standard variable rate, or a tracker of some description. Take a look at the paperwork for full details.

If you can afford to, you may be able to switch to repayment or at least start making capital payments to get your debt down. Three years is still some way away and if you can't pay down the mortgage now, at least put some money away regularly now to pay off a lump of your mortgage in 2014.

You don't have to reapply.

Thrugelmir

Can you afford to make overpayments to your mortgage even if small and on an infrequent basis?

If so, call your lender and ask how you can do this.

Then by maintaining your existing monthly repayments you will start to chip away your debt. Albeit slowly but at least a start. Which in time will then enable you to consider remortgaging to a better rate of interest.

quickben14

Thanks for the reply, Kingstreet. This is my first mortgage and therefore the first time I've had these questions to ask (although I do realise that I could have found all this out at the start).

I believe at the end of the fixed rate period, the interest rate drops from 7.45 to 4.xx. If I remember correctly, my monthly payment will drop from £1078 to around £650. This interest only.

I would like to stay with my lender but go onto a repayment mortgage, while paying the same amount each month.

Do I just ask my lender to go over to a repayment policy ?

hcb42

you cant go on to a repayment mortgage and expect to pay the same amount each month? I think you need to ring your lender. You do need to get onto repayment though, unless you have a repayment vehicle, obviously.

kingstreet

quickben14 wrote: »

Thanks for the reply, Kingstreet. This is my first mortgage and therefore the first time I've had these questions to ask (although I do realise that I could have found all this out at the start).

I believe at the end of the fixed rate period, the interest rate drops from 7.45 to 4.xx. If I remember correctly, my monthly payment will drop from £1078 to around £650. This interest only.

I would like to stay with my lender but go onto a repayment mortgage, while paying the same amount each month.

Do I just ask my lender to go over to a repayment policy ?

You've got around £174k outstanding. Depending on the term you have left, the monthly capital and interest repayments at 4.5%pa will be;-

18 years - £1,192

23 years - £1,025

28 years - £921.

So you should be able to continue to pay a similar amount to the interest-only payments you are currently making. We don't however know where interest rates might be in three years time.

When you are ready to change, contact your lender and even consider a new rate, if there's one available and attractive enough.

beecher2

Remember there's no guarantee the rate will be 4.something by 2014 as it is a variable rate.