Change to interest only w halifax

Technaut

Hi,

I want to change a mortgage I have with the Halifax to interest only for a couple of years. On their site it says this:-

""To change to interest only you will be required to provide us with evidence of your repayment plan.""

I take it they mean an endowment policy? I had a search about google and was expecting to find comparison sites etc but it doesnt really seem to be like that ?

opinions4u

Why do you want to go interest only?

_Andy_

Technaut wrote: »

Hi,

I want to change a mortgage I have with the Halifax to interest only for a couple of years. On their site it says this:-

""To change to interest only you will be required to provide us with evidence of your repayment plan.""

I take it they mean an endowment policy? I had a search about google and was expecting to find comparison sites etc but it doesnt really seem to be like that ?

Have you rung them and asked?

happycamel_2

Not necessarily an endowment policy it could me a mortgage linked equity ISA.

A quick google brought up this from The Guardian, the article was published in February

"Lloyds Banking Group will no longer accept cash savings, including Isas, as an acceptable way to fund the repayment of an interest-only mortgage. Instead, Lloyds – which includes Lloyds TSB, Bank of Scotland, Halifax and Cheltenham & Gloucester – views investment products such as endowments and equity Isas as better longer term vehicles with which to settle an interest-only mortgage."

Thrugelmir

Technaut wrote: »

""To change to interest only you will be required to provide us with evidence of your repayment plan.""

Full details on the website.

http://www.halifax.co.uk/mortgages/help-and-advice/repaying-your-mortgage/#interestonly

HONEYMONSTER

I am thinking along the lines of OPTIONS4U in asking why you want to go onto an interest only plan and that would dictate whether it was suitabe and where to look for the repayment plan and whether it is indeed practical for you.

Assuming you are are on a Capital and interest type mortgage at present, this means that by the end of the mortgage term, you will have paid both the initial capital you borrowed to buy the house and any interest due on the capital.

An interest only mortgage means that you will only be paying back the interest that accrues so at the end of the term will need to find the money to pay off the capital you originally borrowed to buy the property and if you haven't got a repayment plan in place, this could leave you in dire straits at the end of your mortgage term with no ay to pay the money back.

Mortgage lenders have recently had to strictly tighten up on interest only mortgages due to the staggering amount of people who ended up in financial difficulties and any responsible lender will need evidence of your intended repayment plan. The premiums for your repayment plan in addition to your interest only monthly mortgage fees could be similar to your current mortgage payments so it really does depend why you want to do this as to what your options are.

If for instance you have evidence of an investment or intend to draw down a lump sum from a pension to pay off the mortgage so don't see the point in continuing with the capital and interest mortgage at present, that is one thing but if you want to drop to an interest only mortgage as you are temporarily struggling and need to reduce your outgoings, that may not be viable if you have to provide a repayment plan.

So why you want to do it is quite important.