northern rock interest only mortgage

superduper1

we currently are on a variable rate interest only mortgage with northern rock, and have been for almost 10 years, with only 20 yrs left on the mortgage, we're extremely concerned about what our options are about going on repayment. Nram have given us a repayment figure of £886 monthly which is way out of our budget, no other company will touch us because we have no equity in the property, so at the time interest only was the only option for a 100% mortgage, does anyone have any advice?:(

Thrugelmir

Interest only means you are in effect only renting the property. So as each month passes paying off the capital debt will compound as a problem.

Can you afford to make any overpayments on your existing mortgage?

ValHaller

Advice? Yes, overpay.

Too bad you cannot afford repayment. But it is only if you either save or overpay that you are going to reduce the amount owed. And it is only by reducing the amount owed (or an increase in property values which is unlikely for the time being) that you are going to get enough equity to be able to get a mortgage elsewhere.

You are right to be concerned about the situation - each year you do nothing about it will make it harder until the last year when you will have to find all of the money you initially borrowed or face selling up.

I suggest you take yourself as close to that £886 as you can with as many sacrifices as you are able to make. But overpay rather than change the mortgage to repayment.

Wh05apk

What are your ages and property value?

It could be that if you could reduce the mortgage to 80-85% of the value over the next few years (by over paying and hopefully the value rising again) you will be in a position where you could remortgage elsewhere over a longer term.

Brock_and_Roll

When you took out a 30-year 100% interest only mortgage, how were you intending to paying off the capital sum at the end of the term? Do you have any endowment or other savings in place?

Otherwise you have merely been renting a place for the last 10 years but without the renting flexibility to move on as it suits you.

It would appear that the only solution is to overpay as much as you can until you have circa 10% equity.

dunstonh

Overpay what you can until you have enough equity in the property to be able to sell it and repay the mortgage. Then move into rented accommodation.

You are not going to end up owning the property with any solution as you cannot afford the repayments to allow you to do that. So, its a case of dealing with it sooner or later.