Repayment vehicle for intererst only help?

foxyuk

hi guys looking at houses about £320,000 and putting down £180000 been mortgage free for 6 yrs.....

mortgage will be a max of £140k

i have a 6 year plan to move up the way then move back down again and be mortgage free again.

looking at interest only as will overpay as well, i have £75 in savings, £12k isa and £45k equity in a rental flat...

.... am i correvt in saying that if my partner sets up an isa monthly payment this is classed as a repayment cycle and is calculated over the mortgage term ? so £300 per month over 20 yrs -£72k???

any other repayment vehicles?

kingstreet

Halifax has recently tightened its criteria on interest-only mortgage repayment vehicles.

Here's a link to the Q&A on the intermediary site;-

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_interest_only_repayment_calculator/interest_only_q_and_a/default.aspx

this is of course an example and the actual procedure will depend on your choice of lender.

foxyuk

kingstreet wrote: »

Halifax has recently tightened its criteria on interest-only mortgage repayment vehicles.

Here's a link to the Q&A on the intermediary site;-

http://www.halifax-intermediaries.co.uk/tools_and_calculators/mortgage_interest_only_repayment_calculator/interest_only_q_and_a/default.aspx

this is of course an example and the actual procedure will depend on your choice of lender.

i have entered the cash into the savings/ isa howeveras its a lump sum it offers me 1.2 million... do i divide the cash savings over the term???

friendlymortgageadviser

Hi,

There are a couple of lenders that will accept 'sale of property' as a repayment vehicle for interest only, which I have used for some clients recently.

However, this may change in due course.

Senior_Paper_Monitor

Typical requirement (from memory of recent case) for interest only justified by 'downsizing/sale of property' is 60% max LTV with minimum £150,000 equity in property. Certainly limited lenders doing this sort of thing now.

As FMA above says - this may disappear anytime as the lenders continue to tighten up criteria on interest only.

Dave_the_Ginger_Cat

This one is age dependent, but you may find that a lump sum on retirement is an acceptable vehicle for some lenders if your retirement age exceeds the duration of the mortgage.

foxyuk

nationwide use the sale of house as the vehicle for repayment....

halifax only take cash, savings, 2nd property equity(after a survey)

santander been told by broker dont ask for anything and are quite slack .... ps i dont believe him

Thrugelmir

Might as well have a repayment mortgage. Than save cash into an ISA earning a lower rate of interest.

foxyuk

Thrugelmir wrote: »

Might as well have a repayment mortgage. Than save cash into an ISA earning a lower rate of interest.

sorry i dont get your reply .....

i can get 3% on an easy access bank account so if i dont touch the money the interest will offset my mortgage interest only payments...

ltv is 35% and intend to move again in 5 years time and clear my mortgage off....

repayment is £740 odd and interest only is £275 max....

its a no brainer and as you know the 1st 18 months on a repayment the capital doesnt reduce so over the 5 year period i would be worse off on a repayment... as i also intend to overpay


the whole things a farce.... at end of day the bank owns the house till the day u pay off mortgage so at under 40% ltv and a joint salary of £50 k a year . ... wots there problem??

kingstreet

foxyuk wrote: »

nationwide use the sale of house as the vehicle for repayment....

Nationwide criteria;-

Mortgage Repayment Vehicles
As part of our commitment to responsible lending, we need to know how your clients intend to repay any interest only borrowing. We will accept the following repayment vehicles:

stocks and shares ISA including one previously known as a PEP
endowment policy
pension plan
sale of second property
sale of main residence
UK FTSE listed securities
unit and investment trusts
capital from Trust funds
Premium Bonds
sale of foreign holiday home
Unfortunately, there will be some cases where Nationwide cannot accept your client's repayment method as it will not meet our responsible lending requirements.

Sale of property to repay capital is subject to restrictions. If the property is your client's main residence, there must be £150,000 equity and borrowing must not exceed 66% of the value of the property.

The sale of a main residence or sale of a second property cannot be used in conjunction with any other type of repayment vehicle.

If the repayment vehicle is a second property, equity in that property must be at least 120% of the new mortgage that it is intended to cover. The property must be owned solely by your client(s).

hcb42

My capital reduced on a repayment in first five years...paid off about £30K of a £186K mortgage...dont understand that comment.

I hope they tighten up the rules on repayment vehicles for interest only mortgages - seems like another disaster waiting to happen.