Interest Only mortgage advice to become Debt Free

GirlRacer_2

I've noticed on here that a couple of people have suggested changing a mortgage from repayment to interest only for a period of time to help them become debt free. Is this a big saving? I currently pay £465 per month on a £70,000 mortgage. If I changed to interest only for 12 months how much would I be likely to save? Would it be worth my while?

moneymaker2

Hi Girl racer, It prob wont be alot. When we applied for our mortgage I think it was a difference between £100-£150 and that was on a £140k mortgage.
We went for the interest only option for 2 years as we were planning another child and we know that we are still young enough to be able to swop our mortgage to a repayment one in 2 years time.
Hope this has been of some help.

GirlRacer_2

Thanks moneymaker, it's all way above my head this mortgage talk. My debts are not massive I just feel frustrated as I don't seem to be doing much at the moment to decrease them.

It makes sense that I just chip away at them and leave the mortgage alone, but I need to explore every avenue.

Thanks again x

moneymaker2

To be honest it'll prob cost you more to remortgage or change your product with fees and the fact that interest rates are so high at the moment (my prob is i'm not on a fixed rate so my mortgage seems to go up by £30 every month!!!)
If you can afford to clear your debts and leave your mortgage then this may be a better option however i'm still really new to this and i'm sure they'll be others along soon to give you their point of view.
Laura

Mozette

Depends on the type of mortgage, with some you can have a payment holiday - though that will increase the term of course. You'd need to look at the figures really carefully, and see what the costs would be. If you can manage at the moment, and are making headway, however slowly, with your debts, I'd be tempted to leave well alone.

blackangeluk

Hi

After some thought we have decided to do interest only, but the only reason is because our fixed term is up in Sept so we don't have to pay a get out fee. We can apply for it to change deals for a fixed 2 year period from July 1st without incurring a penalty and will save about £150 a month, doesn't sound a huge amount but will mean an extra £3600 over two years to pay off the debt - the plan is then to chuck as much money at the mortgage in 2 years.

We have only decided to do this though as we don't have to pay to get out of our current period as it's due to end, otherwise I wouldn't have done it as the penalties are extortionate!!

Go onto your lender's website, they normally quote there for the monthly repayments.

GirlRacer_2

My mortgage deal is up at the end of September, this is what has got me thinking. When I go for my mortgage review I'll see what the options are.