HELP - how to pay off interest only mortgage?

katie721

I took out an interest only mortgage about 3 years ago to help with my poor financial situation at the time, with a plan to change to a repayment mortgage when finances were better. Unfortunately that time hasn't arrived, I am now divorced, have in place a DMP, relying on my wole income, and am guessing that I won't have a chance of getting a repayment mortgage anytime soon.

My question is how can I pay off my mortgage at the end of the term (have 13 years left) - what is the best type of way to try and save some money to eventually pay off my mortgage when the time comes - would it be an endowment policy??? I should have fully paid off all my debts in another 7 years.

Any advice would be greatly received.
Thanks

ACG

Have a look at your KFI mortgage document. If you can afford it and your mortgage allows it you can overpay each month. This will help to reduce your balance. It might not get it all done in the 13 years but it will atleast be lower than if you were doing interest only without overpaying.

theoretica

How long before you retire? Is retirement far enough off that once your DMP is over you could then change to a repayment mortgage, probably over a longer time?

SilverSix

Most mortgages (only had my first mortgage a year), offer up to £500pm over payments with no charge, over £500 and it's about 10% of the total amount.

I was quite lucky in that I have unlimited over payments and just secured my second lodger to help clear my mortgage in the next 4 years. Depending on the location of the property, size, condition etc (if you have more than one bathroom etc) You can get a fair bit per month for each room. I'll pull in just short of £10k each year for two double bedrooms sharing the main bathroom, £4,250 of which is tax free (Rent a Room Scheme).

A lodger will be the easiest way if you can accommodate for one.

jgh

Interest-only mortgages are predicated on you either putting money into a savings scheme to build up capital to pay off the capital component of the loan, or selling the property to pay off the loan. If you haven't been saving over the term of the loan you sell the property to pay it off.