Switch to Interest only for 2 years?

confused_mortgager

Quick background:-

Outstanding Mortgage Balance £140,000

House value £250,000

I currently have a repayment mortgage which is coming to theend of its two-year fixed deal.

I have recently separated from my husband and now that I amat the stage of fixing a new mortgage deal I am considering taking out andinterest-only mortgage for two years so that I can save some money to be usedin case of emergencies (I have just has to geta new boiler which has used the lastof my savings).

I will then return to a re-payment mortgage once the fixedtwo years of interest only complete.

Is this a wise move?

All help gratefully received!

bigadaj

Probably not, are you under financial pressure currently?

Any interest only deal will need a repayment vehicle or plan in place, since you don appear to have any spare money then this would be a nil sum game.

If you have a good pension available then lump sums on retirement can be considered by lenders for interest only mortgages, though this will ave the effect of reducing any pensions income when you need to draw it.

Thrugelmir

confused_mortgager wrote: »

I have recently separated from my husband and now that I amat the stage of fixing a new mortgage deal I am considering taking out andinterest-only mortgage for two years so that I can save some money to be usedin case of emergencies (I have just has to geta new boiler which has used the lastof my savings).

Which suggests that the mortgage is possibly unaffordable. Better to be honest with ones self.

zzzLazyDaisy

Too little information.

• Are there any children involved?
• Could you take a lodger to up your income, at least on a temporary basis?
• Do you need to borrow additional funds in order to buy your ex out of the house, or are you likely to have to sell the house in the near future in order to release him from the mortgage and give him his share of the net equity?
• Have you put an SOA over on the DFW board to try and find ways of reducing your expenditure?

Sorry if these questions seem intrusive, and of course you don't have to answer them, no-one would blame you if you choose not to. But with no idea of the circumstances, no-one on here can sensibly comment (though in general interest only is not usually a good idea).

One other thing - have you discussed this with your lender, as AFAIK most lenders no longer offer interest only, except as a short term emergency measure.

_Andy_

confused_mortgager wrote: »

Quick background:-

Outstanding Mortgage Balance £140,000

House value £250,000

I currently have a repayment mortgage which is coming to theend of its two-year fixed deal.

I have recently separated from my husband and now that I amat the stage of fixing a new mortgage deal I am considering taking out andinterest-only mortgage for two years so that I can save some money to be usedin case of emergencies (I have just has to geta new boiler which has used the lastof my savings).

I will then return to a re-payment mortgage once the fixedtwo years of interest only complete.

Is this a wise move?

All help gratefully received!

Almost certainly will be declined but only way to find out is to ring your lender.

gazter

confused_mortgager wrote: »

Quick background:-

Outstanding Mortgage Balance £140,000

House value £250,000

I currently have a repayment mortgage which is coming to theend of its two-year fixed deal.

I have recently separated from my husband and now that I amat the stage of fixing a new mortgage deal I am considering taking out andinterest-only mortgage for two years so that I can save some money to be usedin case of emergencies (I have just has to geta new boiler which has used the lastof my savings).

I will then return to a re-payment mortgage once the fixedtwo years of interest only complete.

Is this a wise move?

All help gratefully received!

We did this with our mortgage, it was a 'home start' from hsbc, essentially two years of only paying interest. It was a terrible mistake. We were fortunate that our finance had improved, but it meant that for two years we had paid non of the capital off. We might as well have been paying rent. Even if times are hard, you would be surprised just how much a difference adding to your mortgage monthly makes, instead of taking from it.

_Andy_

gazter wrote: »

We did this with our mortgage, it was a 'home start' from hsbc, essentially two years of only paying interest. It was a terrible mistake. We were fortunate that our finance had improved, but it meant that for two years we had paid non of the capital off. We might as well have been paying rent. Even if times are hard, you would be surprised just how much a difference adding to your mortgage monthly makes, instead of taking from it.

Not the same product. HomeStart was three years of IO reverting automatically to repayment.

OP is looking for 2 year temp IO with no repayment vehicle mid-term. Not going to happen.