mortgage advice needed

big_daddy

Hi Money saving expert forum,

I was sold a mortgage in 2006 by an independent mortgage broker which I was told was interest only. Now that I've had it for 5 years it turns out that it was a low start mortgage turning to re-payment after 5 years (even though I have illustrations from the mortgage broker which state interest only for 25 years!). I'm worried that if interest rates go up I will be unable to keep up the payments as it is increasing significantly now that it's switched to repayment - can anyone advise me as to what I should do?

Thanks

Big Daddy.

Senior_Paper_Monitor

and what does the mortgage offer say ?

big_daddy

I don't have the mortgage offer I can't find it.

ACG

pay off the mortgage, if/when interest rates rise look to extend the term?

but in the mean time your mortgage will be decreasing so it will only be a good thing in the long run.

As for the illustration, might be worth a word with the advisor and ask him to clarify - could be a mix up?

GMS

How were you planning to repay the capital borrowed? Interest only would leave you owing the amount borrowed at the end.

Speak to the broker who arranged it or phone the lender and see if they have a copy of the offer if the broker cant be contacted.

big_daddy

I have been overpaying on the mortgage and have paid 17K off in the last 3 years and I thought it was interest only and liked how I was in control of the payments (to a certain extent) up to now.
Are banks usually open to extending the term of mortgages on the same deal as this worries me?
I'm not sure it is a mix up to be honest I rang him about it and he said that his system wouldn't have been able to print out an illustration of a mortgage starting on interest only and going to repayment!
He told me when he sold me the mortgage to come back in a couple of years time and he would get me a better deal which didn't happen because of the fall in house prices leaving me in negative equity!

thanks

ACG

If youve paid £17k off in 3 years then it sounds like you have been paying more than yo would have been on a repayment anyway?

big_daddy

I probably have but my wife will be going on maternity leave soon and our income will drop dramatically during these months if we had known that our mortgage was going to change we would have saved this money for the upcoming increased payments and not to pay off the capital on what turns our to be a repayment mortgage anyway!

kingstreet

Interest-only with an automatic conversion to repayment after 5 years? Really?

I can honestly say I don't ever remember anything like that being available on the market for brokers. I remember an HSBC product with a change after three years, but that's quite recent.

OP can you tell us the product name and the lender, please?

Simon_gloster

Weren't they the old style low start mortgages for FTB's? Stepped rates alongside them as well? As you say, lender and year would be handy.

The more I read an think it, the more I think he's telling the truth.

big_daddy

I am telling the truth! It's First Trust a bank in Northern Ireland and I got the mortgage in 2007.