Mortgage lender does not allow to change repayment to intrest only

werdas

Hello

my Mortgage lender does not allow to change repayment to intrest only, it is part of northernRock, we have been on a fixed rate for 5 years until now, and now we want to pay intrest only, but we were told they can not change it? is there is a way around?

holly_hobby

Not with your current lender.

Interest only - LTV reqd below 75%

How do you propose to repay the IO mge at redemption ?

Changing from C&I to I/O suggests affordability issues (apols if thats an incorrect assumption). If that is the case, have you considered remortgaging to a lower pay rate, or selling the property and reducing your mge requirements ?

Hope this helps

Holly

ACG

Lenders are increasingly turnign against Interest only mortgages - a lot have a 50% LTV cap.
Theyre also getting stricter on what they will accept as repayment method at the end of the term if it is an interest only mortgage.

opinions4u

Why don't you want to pay the full payment?

werdas

We are in negative equity, we paying £ 1089 , at 4.78%, no point of selling as we would have to cover difference between actual value and what is outstanding with the lender, we would like to save money for the new property, but we would only be able to save if we would pay interest only

ACG

You have no hope (sorry for being blunt).
1) Would you take the risk that the owner may stop paying and then be left with a property less than the loan that is outstanding?
2) The FSA would no doubt crucify your lender if they did.

werdas

ACG wrote: »

You have no hope (sorry for being blunt).
1) Would you take the risk that the owner may stop paying and then be left with a property less than the loan that is outstanding?
2) The FSA would no doubt crucify your lender if they did.

Thanks, but I'm not very keen understanding all these terms, could you pease put it in an easy version, I guess dumb:j

opinions4u

werdas wrote: »

We are in negative equity, we paying £ 1089 , at 4.78%, no point of selling as we would have to cover difference between actual value and what is outstanding with the lender, we would like to save money for the new property, but we would only be able to save if we would pay interest only

You will be better off paying down the mortgage debt at that rate.

No sense sticking money in a savings account and stopping your mortgage debt from reducing.

Robbing Peter to pay Paul and losing out on the interest to do it.

The_J

The absolute worst thing you could do is switch to interest only.

Thrugelmir

werdas wrote: »

we would like to save money for the new property, but we would only be able to save if we would pay interest only

You'll need to clear your existing mortgage debt in order to move.

DVardysShadow

werdas wrote: »

We are in negative equity, we paying £ 1089 , at 4.78%, no point of selling as we would have to cover difference between actual value and what is outstanding with the lender, we would like to save money for the new property, but we would only be able to save if we would pay interest only

You have completely misunderstood what you need to do if you want to move. You will need to

• be able to clear or already have cleared the negative equity
• have savings or equity that will give you 90% or lower Loan to Value [LTV] on the new property

As has already been pointed out, there is no point in having savings at possibly 3% by not paying down the mortgage at 4.78%. It just means you are effectively paying 1.78% for the vanity of saying you have savings.

Just have the savings for an emergency fund and pile everything into the mortgage that you can without paying Early Redemption charges.