interest only mortgage

avanda

Hi.
I have six years left on my mortgage which is £109,000 on interest only. I have an endowment which is estimated to end with £40.000.
I only pay 0.69% on the mortgage. My question is, should I switch to re-payment or keep paying the interest only and open a cash ISA.
Many thanks

Avanda

holly_hobby

Well re the estimated 69k shorftall !!, you could switch to repayment over an extended and affordable term, be this with your current or an alternative lender (assuming that your age, income, and status would permit this) - the resulting higher monthly repayment will have to be met until redemption.

Or you could look to see if the lender will extend the term, and start throwing lump sums off the debt (within penalty free paramaters, usually 10% per yr if on a product), which will give you some flexibility when months are a bit tight, which switching wholly to repayment won't, and you'll obv be saving interest along the way.

If your mge rate is low, then yes you could look to instead stash the capital into tax favourable vehicles (within annual limits), and/or those that give you a net return in excess of your mge rate. But you'll have to be disciplined not to touch the mounting monies for obv reasons.

If however you're a little later in life, and an affordable term will take you past 75 yrs old, most of the high st will be out, although there are 2 smaller lenders whom don't have the age resitrction, IF affordability throughout the mge term is there.

So dealing with the 69k, and your options will depend upon your affordability and age (and poss property value if the mge is small compared to the value of your home).

Bet that makes it as clear as mud eh :rotfl: !!

Hope this helps

Holly xx

Yorkie1

OP, please don't start more than one thread with the same question - it means you have two threads running in parallel ...

duplicate thread:
https://forums.moneysavingexpert.com/discussion/4690553