Struggling to get off interest only

Joe_Bloggs

Quoted:- Nationwide

All Nationwide Personal Loan customers can make overpayments of any amount at any time during their loan term.
If you wish to make an overpayment, please refer to the 'How do I pay my balance?' question.

It seems it would make sense to make overpayments on the Nationwide loan. How long does the Halifax mortgage rate fix last ?

ShazzaUk

Sorry joe i didnt explain it well i am lookiing at trying to get a cheaper monthly rate for my loan by extendinv or applying elsewhere.

Then making overpayments on my mortgage of £200 per month

getmore4less

ShazzaUk wrote: »

We took out an interest only mortgage 4 years ago with the view of switching it to Repayment after a few years.

We have a 147k mortgage with Halifax and pay £500 per month.

We have an 11k loan with Nationwide which we pay £241 per month, we wanted to add this to our mortgage to free up the £241 so we could use that towards our monthly mortgage payment if we switched it to repayment.

Halifax have refused the further advance application and wont allow us to switch cos our ltv would be 86%. The value of our house is £183,500.
I thought they would want us to switch from interest only.

I dont think any other lender would lend us the 158k because of our earnings.
My husband earns 24k and i earn 9.5k.

So seems our choice is to stay on interest only until our loan is payed off. Then switch to repayment, we have 21 years left to pay our motlrtgage. Dont think we can extend the term as my husband is 47 this year and i will be 42.

Does anyone have any sensible advice please

Thanks Shazzauk

£147k @ 3.99% interest only £489pm

£158k @ 3.99% over 21 years is £525 interest only or £927pm repayment.

Adding the £11k and £241pm to the existing mortgage does not fix your problem you are still £200pm short.

Your plan is flawed you need a new one.

What rate does the mortgage drop to after the fix.


Focus on overpaying the high rate debt first, overpaying the mortgage now is a waste of money.

Look at cash flow using 0% credit cards even ballance transfers with 3% feeshelp reduce the cost of the loan.

Bottom line is you need to find a minimum of £200pm, might be a bit less if the mortgage rate drops lot at the end of the fix.

what was the loan for?

DVardysShadow

ShazzaUk wrote: »

.... Dont know what you guys think?

Small endowment due to pay approx 16k in 2024.
We extend our loan to bring payments down.
Overpay mortgage by 200 per year.

In 2024 with overpayments and endowment paid off mortgage bal woulb be just over 100k.

Self delusion. I am afraid. Always pay off the credit with the highest APR.

Harsh, I know to call it self delusion. But the essence of what you are proposing is to finance overpaying the mortgage by keeping the loan going. So you are paying 13.1% interest on loan credit to pay off mortgage credit at 3.99%.

Advice: put all your surplus towards paying down the NW loan until you are rid of it. Then pay down your mortgage.

beecher2

Is there a possibility of increasing income? You earn £9500 per annum - could you take on a second job or increase hours? If you do, throw every extra penny you earn at the loan, and go from there.

itzmee

ShazzaUk wrote: »

Nationwide loan is for 7 years, rate is a whopping 13.10%.

Ouch!! Do you have a flexaccount with Nationwide as their rates on their loans at the moment are 6.3% (7.8% on loans over £15K) for flexaccount customers. I have a flexaccount and found it more cost effective to top up my Nationwide loan and redeem the existing one. The rates are lower than last year so my payments didn't actually change. This may be an option to explore if you qualify as you may be able to reduce the term, rate and monthly payment on your loan.

theoretica

Do you have room in your house for a lodger to bring in more income and pay off that loan faster?

[Deleted User]

if you post a statement of affairs on the debt free wannabe board people will be able to advise where savings/cutbacks could be made to allow you to overpay the loan.

ShazzaUk

Thanks everyone for your views and advice.

My Dad has offered to lend us the 11k to pay off the nationwide loan, we are going to pay him back within three years.

Once the loan has gone we will then transfer to a repayment mortgage with a term of 18 years left. At this point my younger son will be at high school so i can increase my working hours.

getmore4less

Why change to repayment and be commited to higher payments.

Stick with interest only and overpay at least that way if finances become an issue you can stop overpayments.

£11k 3 years is £306pm so £65 short on your current payments

£147k over 18years at 3.99% is £995pm £254pm short on current payments

Have you looked at stopping the endowment is it performing well?