Repayment vehicle?

charmedy2k

Hi all

I'm sorry this may sound like a dumb question but what is classed as a repayment vehicle?
My fiance and I have just applied for a remortgage on an interest only basis but the mortgage co have said they will only let us have it on that basis if we can prove we have a repayment vehicle in place at the start of the mortgage.
We never had to do this with our old mortgage so I'm absolutely dumbfounded on what to do next?
I have heard of an endowment but have no clue what it is and thoughgt that they stopped doing these years ago!

Any advice appreciated.....

moj1966

ne expert but I think they are asking what is going to be in place to pay off the capital amount of the morgage eg the amount you have borrowed.
I have a intrest only morgage but i have a couple of endowments which will pay of the capitail amount. the intrest payments is just the amount the lender charges for you using there money

Mr_helpful

Take out an ISA as these can not be assigned the lender will have no real interest in it. Then you can cancel the policy. I dont know why one or two lenders still worry about repayment vehicles as they will get your house if you dont pay plus they get loads more interest anyway.

jamesd

Regular payments to an ISA, pension, investments of some other sort will suffice.

dunstonh

The FSA have become concerned over the number of interest only mortgages being taken out and have put the onus on advisers and lenders to act in a responsible manner. Some have ignored the "warnings" from the FSA. Others have gone to the other extreme by forcing repayment vehicles onto people.

Stocks and share ISAs tend to be the most popular thing to use against it.

The issues regarding this are:

1 - Most mortgage advisers are not investment authorised. They are not allowed to recommend a repayment vehicle.
2 - ISAs have investment risk and forcing someone to have a repayment vehicle may be a mis-sale waiting to happen.
3 - If dont meet the risk criteria, you go repayment mortgage.