intrest only or mad to ?

robwend

hi guys. comming to the end of our fixed rate soon and rates have gone up2% scince then and remortgaging on a repayment would make money tight. but not impossible. just would mean no social life.our propertys worth about 200,000 and we own 88.000 of that. we need to fix again but would we be very daft if we went intrest only or a combination of both? what does intrest only really mean?, when our kids have grown up we will move and downgrade anyway but would intrest only for say 5 to 10 years be a dumb move? i really understand very little about mortgages..

thanks so much xxxx






thanks so much xxxx

MortgageMamma

Hi Robwend
Interest only means you will only be paying interest on the amount you owe, and that you will still owe the full amount at the end of the mortgage and would have to find a way to pay that off. How long do you have left to pay on your mortgage? sometimes increasing the term can reduce payments to make things easier. The best way to find out the most suitable mortgage product for you and the best way of ensuring the repayments are affordable is to take some advice from a professional

robwend

thanks hun. trouble is we are already on the max for years lol still got another 25 !!but thank you for taking the time to reply xxxx

MortgageMamma

What sort of an interest rate are you expecting? would you consider a longer term fixed perhaps?

robwend

yes id do the 10years but with rates up at the mo it will pinch us a fair bit. by the time we remortgage its going to be up a good£160 a month. and thats really tight for us. means me getting a 2nd job, wish id never brought the damm house now lol

epz_2

interest only is basicly the same as renting, it has values, for example im a contractor and could be sacked at short notice so if i go interest only i can manage the repayment part myself and if something turns up i can use that stash to keep paying up stuff till i get a new job etc.

interest only just cause you cant afford the repayments isnt a good idea to not pay back the money if you ever want to be mortage free since you will be paying the interest forever unless you set up your own vehical.

JoeK_3

If I was you, I would look at a good term, maybe five years, capped rate. This way you can cap the maximum amount that you will pay but enjoy the rates if they come down in the future.

An interest only mortgage strategy is fine for the short term as many people use this strategy to remove the financial pressures of interest rate hikes but do remember to convert back to a capital and interest repayment mortgage when things are under control again with interest rates.

Hope this helps

Good luck

JoeK