Interest only deals all gone ?

joshua102

Have ALL the interest only deals on mortgages now ceased or are the ones where you have to borrow a minimum 300k like Virgins the only ones left ?
When I input my details wanting one on comparison sites it says over 700 available till you click on them.
I am after a 65% LTV interest only borrowing £112000
Any ideas ?

Thanks

ExpertAdvice

Hi,

Yes, interest only deal on residential mortgages are gone. They are still available on BTL though with minimum LTV of 80%.

GMS

What is your plan to repay the capital borrowed?

HappyMJ

joshua102 wrote: »

Have ALL the interest only deals on mortgages now ceased or are the ones where you have to borrow a minimum 300k like Virgins the only ones left ?
When I input my details wanting one on comparison sites it says over 700 available till you click on them.
I am after a 65% LTV interest only borrowing £112000
Any ideas ?

Thanks

I have an idea....you may not like it...

Borrow 75% of the value of the property ... Borrow £130,000.

With the £18,000 cash you now have invest it in an ISA paying about the same as the mortgage interest rate that you have obtained. Then withdraw from the ISA the excess amount that you require each month to pay the capital and interest on the mortgage each month. If you get a rate of 3% your payment on £112,000 interest only would be £280. The repayment on a £130,000 mortgage over 35 years would be £500 a month so you could withdraw £220 each month.

After 7 years you should run out of money in the ISA (£18,000/£220/12 months) and the mortgage balance will be about £112,000 and you can then rinse and repeat...doing it all again. It's effectively an interest only mortgage. A strange way of doing it but it does work.

joshua102

I did use the sale of property vehicle when I took out my current deal although this is now not acceptable to them so my choice is now stay on interest only going onto Santander SVR or go onto repayment mortgage but will have to weigh up price difference, Yorkshire buiding society have a 1.6 % deal

Thrugelmir

joshua102 wrote: »

I did use the sale of property vehicle when I took out my current deal

Presumably though you had longer term plans.

HappyMJ

joshua102 wrote: »

I did use the sale of property vehicle when I took out my current deal although this is now not acceptable to them so my choice is now stay on interest only going onto Santander SVR or go onto repayment mortgage but will have to weigh up price difference, Yorkshire buiding society have a 1.6 % deal

2.84% for 5 years for 75% which is another choice. You should be able to get 2.84% in interest borrowing more and investing the excess in an ISA.

joshua102

HappyMJ wrote: »

I have an idea....you may not like it...

Borrow 75% of the value of the property ... Borrow £130,000.

With the £18,000 cash you now have invest it in an ISA paying about the same as the mortgage interest rate that you have obtained. Then withdraw from the ISA the excess amount that you require each month to pay the capital and interest on the mortgage each month. If you get a rate of 3% your payment on £112,000 interest only would be £280. The repayment on a £130,000 mortgage over 35 years would be £500 a month so you could withdraw £220 each month.

After 7 years you should run out of money in the ISA (£18,000/£220/12 months) and the mortgage balance will be about £112,000 and you can then rinse and repeat...doing it all again. It's effectively an interest only mortgage. A strange way of doing it but it does work.

Good suggesstion although I am 44 so mortgage only to age 65 was my plan, Wish I had known before as would have tied in to current one longer,

HappyMJ

joshua102 wrote: »

Good suggesstion although I am 44 so mortgage only to age 65 was my plan, Wish I had known before as would have tied in to current one longer,

You can reset your retirement date to 75 and you can use a pension income to continue paying the mortgage into retirement. Even though your real plan is to sell and downsize before that time.

joshua102

Thrugelmir wrote: »

Presumably though you had longer term plans.

I was actually thinking I would sell up as would be at retirement age in 21 years and enough equity to rent / move away etc
I only went on interest only due to divorce and paying out the ex and did intend going back onto repayment in a few years

Perelandra

I think HSBC (and by extension First Direct) still offer interest-only mortgages, for those with higher equity percentages.