Interest Only Repayment vehicle

jintyb

I am hoping that someone can help out. I have a IO mortgage with Halifax of £124,000 with 11 years still to go. I am about to sign up for a new deal with Halifax fixing the rate at 4.49% for four years. I don't want to change lenders. If I do nothing, my interest rate will revert to their SVR of 3.99%. I pay £492 pm presently.
My questions are:
Do I switch or let it go on to SVR?
How do I get something in place to repay this at the end of term?
I am due to inherit @ £75k in @ 10years time. I cant afford to change the whole mortgage over to cap & repayment.
Are there any options?
I would be so grateful for any help on this!

HappyMJ

Extend the term to your retirement date and switch to repayment. You should get £50k paid off by the time your inheritance comes through and then you'll have no further payment to make if you put the £75,000 towards the mortgage.

The cost will be pretty much the same as having interest only and saving about £100 a week into an ISA or similar investment for 10 years.

However, you'll save a little more in interest charges by paying into the mortgage rather than saving....but you no longer have access to the cash should you need it. Pros and cons..you'll have to think about them.

jintyb

Hi, thanks for that, the mortgage ends at my retirement date. Can you put part on c& r ? Or do you have to put the whole lot on repayment?

Auntie-Dolly

With Nationwide I asked if I could move half of my IO to repayment and they told me it was all or nothing, but it might be different for different lenders.

Thrugelmir

Start by overpaying by what you can afford to. With 11 years to run there's a high possibility that your mortgage will become somewhat more expensive to repay. Spend some time reviewing your outgoings to identify some savings.

As a backstop is there any option to downsize?

TrickyDicky101

Can you make overpayments? That way you can choose each month how much capital you want to repay and can tweak your monthly payments (inclusive of overpayment) accordingly.

jintyb

Thanks folks, never thought about overpayments, there might be some room for that. We are in a small house atm so downsizing not really an option. do you have to ask your lender if its ok to overpay?

amnblog

Have you discussed this product switch with Halifax yet?

blinko

what is your LTV and LTI, this will affect the rate on the mortgage, I think 60% or below will give you access to the best but 70% should give you access to most.

In terms of overpaying you will need to check the terms and conditions of the mortgage. Some allow unlimited over payments, some allow a maximum £10,00 per year some say maximum is 5/10% of loan..

jintyb

No, I havent discussed switching to cap and rep with Haifax as yet. I had a look at the T&Cs and they allow overpayments of up to 10% per year.

ACG

On the SVR you can overpay as much as you like. when tied in to a deal its usually 10% you can overpay by.

Are you definitely going to get inheritance in 10 years? If not then I would not rely on it... the sooner you may overpayments, the sooner you start saving money (in interest) and the less you will have to overpay each month in order to bring it down.