Remortgage to interest only?

Thrugelmir

Puddickle wrote: »

It seems simple in my head - can anyone see any potential pitfalls with this plan?

Your lender will see no benefit in your plan. Why should they forego the capital repayments at a time they are reducing mortgage exposure. Given the reason for the request. You are unlikely to find many lenders willing to play ball.

John424

What interest rate are you paying on your credit cards? can't you shift some of the debt into a personal loans or is your rating affected? Personal loans are down to 5% for quality rated customers, not much higher than some SVRs.

suburbanwifey

I would advise against going onto interest only (you would get refused anyway) as I have seen how this *idea* pans out in reality. A couple who are friends of ours owed around 34K on credit cards and also had a sub-prime mortgage. They bought at the height of the boom when lending was given out to anyone virtually, they were also given too many credit cards that they could show no self control with ('I needed the new 60 pound shirt - on credit card! to go out, all my others I had worn at least once and she needed some clothes as well' was a reply the guy gave to my husband when he tried talking to him about his attitude to debt)

They asked to go interest only two years after taking the mortgage and it was approved *sigh* they have now been paying what is in effect rent to live in their home and guess what? he took a big loan out to clear all the credit cards and guess what? within 3 years they are all maxed out again. So to summarise, they went from having a capital repayment mortgage and credit card debt to having an interest free mortgage on a house that has decreased in value, the same credit card debt plus a personal loan. He recently had to start working away (changed his job) to keep their heads above water - came home once a week. The *extra* money was going to clear their debts but guess what?? he needed an iPad, two pints every night in the pub he paid rent to every week Monday to Friday and of course, take-aways! The extra money got spent, they still have their interest only mortgage, 35K credit card debt (it went up with missed payments) and the big loan. They are sinking fast and that new job he took a year ago paying more money, they let him go last Monday so now he is unemployed with a gf and two kids and a house they will lose and debts they will now totally default on. Lives ruined, through stupidity.

I advise you to pay off your credit card debt as you are doing, leave your mortgage be, it goes down (what you owe) every month and forget moving to a bigger house for now. Get stable, get debt free, enjoy the home you are lucky to have. Mortgages are hard to get, businesses are going under, the economy is about to slip into recession again. Nothing is safe in this unstable world. Don't end up like that guy I know and who my husband wanted to say 'I told you so' but didn't as it would have been a total waste of time!

originalmiscellany

Deal with the real issue, postponing an interest only is only putting off something that you need to deal with now.

If you've over spent (Hugely) do an SOA, post on here - however I am speaking from an idealistic viewpoint...

swampduck

It's not entirely unlikely that the OP couldn't change the mortgage to interest only for a while. Our mortgage company did this for us because OH was self employed, he then found a permanent job. Then a year later was ill in hospital for 11 weeks and then had to reduce his working hours when he was fit to return to work!
Things have now settled down and we are back to the full repayment plan albeit with increased payments to finish the mortgage by the original contractual date.

Our credit rating was shot to bits over the last few years but we created our own DMP and told all our creditors what we could afford to pay (and for a while this was £1 per month each!) We ended up with a few defaults and snotty phone calls but if you stand firm they can't do much to you. We still have seven years to go with our DMP and this is getting less as we snowball and increase payments where we can and the defaults are starting to drop off. Look at the bigger picture is the best advice anyone can give.

The OP is looking to the mortgage company to help them out with their debts when they should be looking at it the other way round and saying no matter what the mortgage gets paid and everyone else waits.

A rubbish credit rating is a small price to pay if it keeps a roof over your head.


Swampy

suburbanwifey

swampduck wrote: »

The OP is looking to the mortgage company to help them out with their debts when they should be looking at it the other way round and saying no matter what the mortgage gets paid and everyone else waits. A rubbish credit rating is a small price to pay if it keeps a roof over your head.
Swampy

This exactly is the main point the OP should focus on. Good strong sound advise that should be followed by the OP.