Overpay or Repay?

jezthomas

I'm remortgaging.
My current mortgage is interest-only.
I'd like to start paying some of the loan off now.
The ideal is to switch to a repayment mortgage, but I can't afford the monthly payments.

A few questions popped into my head surrounding my situation:

1- Would it be a good idea to get an interest-only mortgage and pay some extra every month; and if so, how much is the maximum I could pay over the agreed monthly payment? I heard something about a legal minimum of 16%, but not sure if this is true.

2- Is the above only possible if I have a 'flexible' mortgage, or can I do it with any kind of mortgage?

3- Would it be better to get a combination of 2 mortgages, say half the lending interest-only and the other half a repayment mortgage? Are these hard to find or agree with lenders?

4- And I'm also wondering, if I can pay more than the interest-only mortgage, would my money go further (i.e. get rid of the balance more quickly) if I pay over on an interest-only, or if I have a mix of interest-only and repayment borrowing?

Any advice would be gigantically appreciated!

Thanks in advance,

Jez

Thrugelmir

jezthomas wrote: »

The ideal is to switch to a repayment mortgage, but I can't afford the monthly payments.

This would more than likely be detected during the remortgaging process. As with a new interest only mortgage, the lender will need assurance that the mortgage debt will be repaid.

What options has your existing lender offered you?

Can you afford to start making overpayments on your existing mortgage? Even if just small sums.