Changing form interest only to capital repayment

bhzmac1

I currently have an old Alliance and Leicester mortgage on a interest only basis, situations have changed from when I originally took out the mortgage and I now need a standard repayment mortgage, I would like to also like to add my partner to the mortgage, we are also looking to move in the very near future. So we are basically looking for £75k over 25 years and the potential to increase to £113k on the same terms if we move

Called Santander who now manage my mortgage I can transfer to the standard variable rate repayment for a admin charge of £50 at the rate of 4.99 after it has been transferred I can apply for an extension to the term as I have 17 years remaining and could extended to another 8 years to theoretically give me the 25 year term I need, there is a £25 admin charge for this but no guarantee they will accept , I can then apply to have my partner added to the mortgage again for a small fee. The end result being a joint repayment mortgage over 25 years on a variable rate.

My question is it worth changing my current mortgage as mentioned or I am I better off getting a completely new deal, my LTV is 89% so most of the the deals are currently around 4.1% for a fixed period of around 2 years but then revert to 4.99 plus after the term, the fees are around £1000 + valuation costs for a new deal. Also had anyone had any experience in extending there term particularly with Santander / A&L?

kingstreet

If you are looking to move house, leave all this for now.

All the administration costs and issues can be avoided by simply buying in joint names with a joint mortgage.

You can also consider a new lender and a better deal by doing so.

kevelesopnic

Agree with the above, no point changing deals now and again when you move. I would suggest however that you calculate the new repayments based on the mortgage you will require when you move and begin saving the difference in a seperate account. This will a/, ensure you can afford the higher repayments, b/, help build up a bigger deposit and c/, demonstrate to the new lender than you can afford the higher repayments.

bhzmac1

I agree this would be the simplest situation, however there is no guarantee on moving house and I really want to get off the interest only and start reducing the capital...Considered the option of making over payments on the current mortgage but this requires will power and it too easy not to make them.

kingstreet

Save the money into a special account called the "new house account" then you can use the proceeds to have a lower mortgage on the new property.

Set up a standing order so it goes out every month when you get paid, then you know it's gone before you start spending.

If you don't move, pay a lump sum off the mortgage instead.

bhzmac1

kingstreet wrote: »

Save the money into a special account called the "new house account" then you can use the proceeds to have a lower mortgage on the new property.

Set up a standing order so it goes out every month when you get paid, then you know it's gone before you start spending.

If you don't move, pay a lump sum off the mortgage instead.

Would I not be better off making the over payment rather than saving , as they way I understand it each month the capital will reduce and so will each months interest charge?

kingstreet

It may well be, however I was trying to legislate for your self-confessed, possible indiscipline;-

this requires will power and it too easy not to make them

without actually saying "grow up" or something equally blunt!

Why not just change the mortgage to repayment then? You don't have to mess about with the new product and transfer of equity to do that.

JimmyTheWig

bhzmac1 wrote: »

Considered the option of making over payments on the current mortgage but this requires will power and it too easy not to make them.

kingstreet wrote: »

Save the money into a special account called the "new house account" then you can use the proceeds to have a lower mortgage on the new property.

Set up a standing order so it goes out every month when you get paid, then you know it's gone before you start spending.

If you don't move, pay a lump sum off the mortgage instead.

I agree with this.
If you still think you might touch the money, set up the new savings account with a bank you don't currently deal with and destroy the log in details. Wouldn't be so tempting to spend if you'd have to go to the branch with your passport, etc.

JimmyTheWig

kingstreet wrote: »

Why not just change the mortgage to repayment then? You don't have to mess about with the new product and transfer of equity to do that.

In the OP they said there was a £50 fee to do this. Seems a bit pointless to pay this for a short-term change.
I know when, about 5 years ago, we changed from repayment to interest-only with Santander we were charged something like £50 admin fee.

bhzmac1

kingstreet wrote: »

It may well be, however I was trying to legislate for your self-confessed, possible indiscipline;-


without actually saying "grow up" or something equally blunt!

Why not just change the mortgage to repayment then? You don't have to mess about with the new product and transfer of equity to do that.

Thanks for your restraint...although on here I am used to bluntness.

Just checked my current interest is the same as the one offered. I am thinking SO a set amount each month to match that of what I am looking at paying on a repayment product. And apply for the transfer of equity (I need to do this for other reasons)

bhzmac1

JimmyTheWig wrote: »

In the OP they said there was a £50 fee to do this. Seems a bit pointless to pay this for a short-term change.
I know when, about 5 years ago, we changed from repayment to interest-only with Santander we were charged something like £50 admin fee.

Not sure at the moment if the change is short term or not...our house is on the market but we are losing the will to move a little bit more each day