Interest only Mortgages - chelsea or Santander (repayment vehicle)

Thrugelmir

shortchanged wrote: »

Personally I would say that is tantamount to fraud, whether or not it is legal.

It is a deceptive way of getting an IO mortgage.

LloydsHBOS for one, is intending to spot check that interest only repayment plans are maintained and will reach their intended objective.

So while this route may appear extremely clever , the longer term consequences may actually impact on an individuals credit record.

Wh05apk

Thrugelmir wrote: »

Maybe you need to draw up a detailed budget and adjust it accordingly. Deferring until tomorrow is the easy option. That merely compounds the problem.

It's a bit late for that, the OP is looking to remortgage, therefore has the mortgage already, and is looking to improve their situation by finding a lower rate.

"Deferring until tomorrow" is perfectly reasonable if they are comfortable they will be financially better off, possibly saving a small fortune in childacre, and possibly another parent working or increasing their hours.

Thrugelmir

Wh05apk wrote: »

It's a bit late for that, the OP is looking to remortgage, therefore has the mortgage already, and is looking to improve their situation by finding a lower rate.

Never to late to review a personal budget. Too often the mortgage is seen as the easy painless way out of a tight financial situation.

Wh05apk

Thrugelmir wrote: »

Never to late to review a personal budget. Too often the mortgage is seen as the easy painless way out of a tight financial situation.

The OP is not looking for budget planning advice, what would you suggest they sell up now, then buy back again in 2 years time when their budget permits? Peoples lives change, it would appear this is down to a change in circumstances.

A lot of people without "steady" income have interest only mortgages (me included) because their income is more erratic, and interest only suits their needs, provided the individual takes responsibility for their choice (and it would appear the OP does)there is nothing wrong.

Thrugelmir

Wh05apk wrote: »

The OP is not looking for budget planning advice, what would you suggest they sell up now, then buy back again in 2 years time when their budget permits? Peoples lives change, it would appear this is down to a change in circumstances.

A lot of people without "steady" income have interest only mortgages (me included) because their income is more erratic, and interest only suits their needs, provided the individual takes responsibility for their choice (and it would appear the OP does)there is nothing wrong.

Last year the CML quoted a figure of 3.57 million interest only mortgages, of these only 25% had any proper plan in place as to how they intended to repay the capital. So the rule changes are being implemented for good reason.

Wh05apk

Thrugelmir wrote: »

Last year the CML quoted a figure of 3.57 million interest only mortgages, of these only 25% had any proper plan in place as to how they intended to repay the capital. So the rule changes are being implemented for good reason.

That's useful.................

Once again the OP is not looking for budget planning advice, they are where they are, what do you propose, they downsize now and buy back in a couple of years, with the expense involved, or remortgage now to save money, and start overpaying as and when they can?

shortchanged_2

Wh05apk wrote: »

That's useful.................

Once again the OP is not looking for budget planning advice, they are where they are, what do you propose, they downsize now and buy back in a couple of years, with the expense involved, or remortgage now to save money, and start overpaying as and when they can?

Well yes, they could get a cheaper house that they could actually afford now.

kingstreet

PeppaP wrote: »

We've always had interest only mortgages in the past and have overpaid rather than had an explicit repayment vehicle in place. We've always been ahead with our overpayments so thats not been a problem. We're looking at re-mortgaging at the moment and see good deals from Chelsea and Santander on I.O.

Our house is worth £500 ish, we need to borrow £220 but we have high childcare costs for the next 2 years until our youngest goes to school and would like the flexibility of staying on interest only.

I called Santander with the intention of applying online and they asked a lot about our repayment vehicle. We have share ISA's which they said are not appropriate for a repayment plan and i need to come up with a repayment plan that meets their criteria before we can apply. Thing is i don't know what their criteria is and if chelsea will be the same. They cannot give that advice over the phone. Can anybody help as to what repayment vehicles will meet their criteria.

Does anybody have advice on Chelsea re i.o and if they are easy to deal with? It seems to me that santander don't really want to lend on an i.o basis but i may be wrong?

We've used mortgage brokers before - am wondering if its possible to re-mortgage on i.o without a broker. We've never actually set up a repayment vehicle in the past through any broker but this may be as a result of the credit crunch.

Many thanks for your help

What's your current lender's follow-on rate you'll go onto automatically? What customer retention products does it have for people like you with a product coming to an end?

Wh05apk

shortchanged wrote: »

Well yes, they could get a cheaper house that they could actually afford now.

So you are suggesting estate agents fees of say 2% on £500k - £10k, stamp duty 3% stamp duty on say £350k - £10,500, solictors etc possibly £25k in total, to downsize, then same again in a couple of years when they can get "approval" from MSE committee?

This looks like a temporary change in circumstances, in this situation, it makes sense to rein in their mortgage costs, then start again in a couple of years.

This is not, or should not be a debate a interest only mortgages, that is not what was asked, it was simply about lenders criteria.