interest only verses repayment

yorkshire_puddin

What are the pros and cons of each?
I'm setting up a new mortgage interest only would be £630 and repayment would be £830.
This is much more than I'm used to paying so was thinkin of going interest only and paying the extra £200 by choice, that way if I have other unexpected bills one month.. I can pay them instead.
Are there any good reasons why this would be a bad idea?

Thanks for any help you can offer.

dunstonh

At the end of the term, you will be aske to repay the outstanding capital on an interest only mortgage.

To be honest, if you cannot afford just £200 difference then you really ought not be going with the amount you are looking to borrow. A couple of interest rate rises could see you eating up £200 easily.

It's one thing to stretch yourself but its another to consider interest only because you may not be able to afford a repayment mortgage.

yorkshire_puddin

I'm opting for a fixed rate for 5 years to protect against interest rate rises.
Was just thinkin of hangin on to some of the money in case of emergencies.
As a way of having some control over my finances.
I don't like having credit and wouldn't want to start now.

doitmyself

The whole interest-only thing is understandable I guess in the current and perhaps on-going climate of high property prices, but can only really end in tears for many, can't it?

tweep

We have decided to pay interest only 630 pm and bank 250 min pm to ofset reducing the interest we will pay. when the term is up we will have 3000 per year to put down as our deposit on our next move its just more flexi and more choices for us.

raq

we are interest only up until september as my husband just started off and wanted to get into a good area. We are looking at repayment this year and also changing lenders. I wouldn't do this forever and a day as the way the rates are going who knows.