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interest only mortgage with property as repayment vehicle
Comments
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You would probably be best speaking to a broker.
As second charges are currently unregulated they can lend on equity rather than income - although that would still be taken into account to some degree.I 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 -
Why is interest only considered high risk if it's clear the capital can be repaid when We sell?
If house prices fall our equity could fall a bit too but so would the price of a house we would be moving to so if our borrowing is only 25% LTV I don't see how it would be high risk?
What would be low risk? Mortgages are given every day to people with a deposit of only 15% and if they lose their job a year down the line, they will be in real trouble so I don't see that as low risk for a lender?
I am not an expert but I am trying to find out more so any info is helpful. Thanks for your response.0 -
A lender does not want to be put in a position where it has to force you to sell your home to repay the mortgage, or to repossess to achieve the same result.
If you have a separate repayment vehicle, you are far more likely to repay the mortgage with less fuss.
This is what the regulator wants to see. Blaming lenders for changing their policies is misguided.
Regardless of the interest-only position, affordability has been moved to the forefront of responsible lending policy since the implementation of the MMR in April.I am a mortgage broker. You 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. Please do not send PMs asking for one-to-one-advice, or representation.0 -
The problem is that in one breath you say you will downsize to repay the loan and in another you say that you love the house and don't want to move so who is to say in 10 or 15 years when the interest only mortgage ends that you will want to move then
Best option is to see if your lender will extend the term to reduce the payment on interest only but if income is as low as you say you may come up against the mmr rules on affordability.
If you cannot afford the mortgage you may be looking at one of the options one of the others has suggested to release equity and pay through the nose for it or sell and downsize nowI am a Mortgage Adviser
You 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
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