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Remortgaging Help!!

I don't know if this is gonna be a stupid question but here goes....

I bought my first property 18months ago and had a fixed rate interest only mortgage for 2yrs. (I had planned to change to repayment mortgage once we had got ourfeet on the ground but it never happened- however we do have savings to cover it). So when am not fixed in anymore (in six months) we want to change to a repayment mortgage. Obv we want the cheapest going and we are gonna look for it to be fixed again for 2-5years. However I'm not really sure how you do this? Firstly how much will my mortgage be now I have paid 2yrs off of the interest?? How does it work?? And when I look around for other mortgage lenders do I have to inform my mortgage lender that I'm leaving or will that just happen when I sign up for new mortgage??

Sorry am a bit new at all this and am confused :confused:

Comments

  • herbiesjp
    herbiesjp Posts: 8,499 Forumite
    The mortgage amount at the end of the two years will be the same as when you started - could be more if you added fees - as you took an interest only mortgage the balance does not decrease

    You would firstly go to your current lender and find out what deals they would offer you.

    You would then look for yourself, or get a whole of market broker's help, to find if there is a better deal from the rest of the market.

    In terms of notifying the lender, you can let them know, but normally the solicitor that is doing the legal work will notify the lender and ask for the relevant paperwork from them

    HTH
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Cookie82
    Cookie82 Posts: 27 Forumite
    Thanks HTH

    So now I feel really stupid- does that mean I have just wasted 2years paying interest only to have to start all again?? That bit that I have paid hasn't reduced anythign at all?? :eek:
  • herbiesjp
    herbiesjp Posts: 8,499 Forumite
    I wouldn't say stupid!

    Maybe it was not explained to you at the outset

    BUt yes, it means that you have not paid anything from the mortgage - you have jusy been paying the interest on the mortgage.

    Without paying the interest though, you would not have had a property
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • sarkin
    sarkin Posts: 785 Forumite
    If you want to see the difference between monthly payments on I/O and repayment goto http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml you can then play around with rates and term. this should let you know if you can afford to switch to repayment.
  • Cookie82
    Cookie82 Posts: 27 Forumite
    So will I have a little bit less interest to pay??

    Thanks it should be no problemdoign repayment as we can afford it but we jsut started off on interest only while we bought furniture etc, then sort of just got left and was never change and used extra money on holidays....whoops. Have learnt my lesson now:p
  • kingkano
    kingkano Posts: 1,977 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    So will I have a little bit less interest to pay??

    not at the beginning.... but as time goes on and pay off capital the interest portion will be reducing slightly each month.
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