Repayment vehicle

Brisbanebronco

Hi

does anyone know if a lender can / will check if a borrowers repayment vehicle is on track if they are on an interest only mortgage? For example, if my repayment vehicle was a stocks and shares ISA that I paid £200 per month into, how would they know that I was maintaining this level of contribution or that the return was on track to cover the outstanding mortgage?

thanks for your help

Thrugelmir

A lender may request sight of a current valuation statement. This would give a reasonable indication.

Is it worth cheating yourself though? At some point you will have to deal with the can that you are kicking down the road.

Brisbanebronco

thanks - sorry I should say that this is for a B2L mortgage and I have about 40% equity in it. My lender has given me consent to let but wont switch it to interest only unless I go through a full application again and somehow prove that my repayment vehicles will cover the outstanding debt. They couldnt give a definitive list of what constitutes a repayment vehicle but that cash wouldnt count. I have assets in various different asset classes but choosing to keep some in cash just now for safety which they wont count, if I increased my monthly contribution into a S&S ISA for a short period of time - can they monitor this? My argument that they were penalising me for keeping some of my assets in cash for a short period didnt seem to wash with them!

dunstonh

this is for a B2L mortgage and I have about 40% equity in it.

Buy to let mortgages are nearly always interest only and do not require a repayment vehicle.

My lender has given me consent to let but wont switch it to interest only unless I go through a full application again and somehow prove that my repayment vehicles will cover the outstanding debt.

Consent to let and buy to let mortgages are two different things. You have a residential mortgage. Not a buy to let mortgage. So, whilst they are giving consent to let, they are leaving you on a residential mortgage and you have to comply with those terms.

if I increased my monthly contribution into a S&S ISA for a short period of time - can they monitor this?

No they cant. However, they are within their right to ask you to provide proof at any time. That is very rare and as long as you are paying the mortgage, it is unlikely.

Thrugelmir

Brisbanebronco wrote: »

My argument that they were penalising me for keeping some of my assets in cash for a short period didnt seem to wash with them!

That's because you'd achieve a better return by repaying the mortgage rather than holding cash.

Recent stock market gyrations show how difficult it is to use a vehicle such as a S&S ISA to repay a mortgage.

Even if you increase your contributions to an ISA, you could still suffer further losses in the short term. Which would then require you to increase your contributions even higher.