Switching to interest-only mortgage - alternative capital payments

james_joyce

Hi

I am asking my building society if I can switch from repayment to interest-only mortgage. They will apparently send me a form asking me for details of how much I will be paying into my alternative capital repayment every month.

I have said this will be a mix of S&S ISA and a Share Incentive Plan at work (the person I spoke to at the BS didn't know if the SIP is acceptable to them for this purpose).

Does anyone know how much the monthly capital payment typically has to be, to satisfy a BS? If it's the same as the capital element of a repayment mortage, is there any point in switching? Or can it be a lesser amount, due to the likely future growth of the capital concerned? For example I pay £400 capital on my mortgage at the moment. Might I only need to pay eg £300 into a shares-based ISA?

Thanks
James

Thrugelmir

Is your aim merely to reduce your outgoings?

Unless you save with a contingency margin then the inherent danger is that the market is low at the time you need to cash it in.

james_joyce

Does that mean I need to invest more than £400 a month? Yes I would ideally like to reduce outgoings slightly.

Thrugelmir

james_joyce wrote: »

Does that mean I need to invest more than £400 a month? Yes I would ideally like to reduce outgoings slightly.

Then I would say yes.

FTSE 100 is only up around 44% over last 10 years with dividend income reinvested. So unless you had all your money invested in Imperial Tobacco up over 300% in share price and 600% with income reinvested in that period. It really is a lottery.

james_joyce

Right I think I will try a payment holiday instead!