Transfer of Equity - Question from lender

Gavin_R

I hope someone can offer some advice please.

I am currently going through the transfer of equity on a property jointly owned by myself and a previous partner. Its all amicable and the lender is halfway through the process and has approved my earnings etc.

I received a letter from the lender asking for confirmation of how I am going to repay the balance at the end of the term as the mortgage is on interest only.

The mortgage term left is 20 years, the balance £160,000, property value £180,000.

Whats best to advise on repayment at end of term? change lender or new mortgage at end of the term? that I am saving £500 a month for 20 years?

Any help would be appreciated on what they would like to hear.

DVardysShadow

Best to advise that you have some kind of savings plan or that you would accept a change from Interest Only to Repayment.

Gavin_R

I am saving in the region of £500 to £600 a month. Not so much a plan, just saving the money. Is that enough to satisfy them?

DVardysShadow

I doubt it. The days when you could just say "We will overpay as and when" are long gone. You will need a product which commits you to put the money by. So you might as well offer to go repayment. Overpaying a mortgage gives a pretty good return too.

Thrugelmir

You may be asked to switch the mortgage onto a repayment basis in the absence of a repayment plan. Is this affordable? If not the lender may decline the application.

opinions4u

Any help would be appreciated on what they would like to hear.

The truth is usually a good starting point.

ACG

unless the interest in your bank is paying more than the interest on your mortgage it makes no sense to do what your doing.

Even if it does its still not likely they will accept it, unless you were to maybe pay into that until the interest rate on the mortgage raises above what the bank is paying you - in which case you might need to provide proof of savings and the product. Still no guarantee but if you can show you have been paying into a savigns account for a while they may accept it.

Gavin_R

Thank you for the responses. I didn't want to switch to repayment just yet incase rates go up and I couldn't switch back to interest only. So wanted to go a little further on interest only. I will call the lender and ask what they are looking for in more detail perhaps.

Gavin_R

opinions4u wrote: »

The truth is usually a good starting point.

No help what so ever.