We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Advice on Interest Only method please
Options
sasilverman
Posts: 51 Forumite
A financial advise gave my friend this advice, was wondering on what everybody thought?
Suppose an interest only mortgage came to £400 per month
Now suppose I did an I+C mortgage, which came to £500 per month
I would assume that the £100 difference would go straight against the capital.
According to this adviser this is not the case! Apparently only a small proportion of this goes against the capital, the rest against the interest!
Their advice is to take the £400 interest only mortgage and put the other £100 into a high interest account. Then at the end of your 2 YR fixed rate (for example) remortgage with the £2,500 against the capital.
Then repeat the process.
Is this right? Any thoughts?
Suppose an interest only mortgage came to £400 per month
Now suppose I did an I+C mortgage, which came to £500 per month
I would assume that the £100 difference would go straight against the capital.
According to this adviser this is not the case! Apparently only a small proportion of this goes against the capital, the rest against the interest!
Their advice is to take the £400 interest only mortgage and put the other £100 into a high interest account. Then at the end of your 2 YR fixed rate (for example) remortgage with the £2,500 against the capital.
Then repeat the process.
Is this right? Any thoughts?
0
Comments
-
your friend is wrong - anything above the interest element will reduce the capital. Interest only is OK if you are confident that your investment return will be higher than the mortgage rateI am a Mortgage AdviserYou should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it.This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 350.8K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.5K Spending & Discounts
- 243.8K Work, Benefits & Business
- 598.7K Mortgages, Homes & Bills
- 176.8K Life & Family
- 257.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards