Interest Only mortgage

han2505

We have just taken out an interest only mortgage as we could get more than a repayment one.

I am just wondering what happens at the end of the 2 years do we have to pay the figure we would have paid on the repayment in cash? Or can we just pay interest and then at the end of the 2 years just remortgage for the price we bought it at and not have to pay any cash unless we want to?

Thanks

MarkyMarkD

As you're payment is interest-only, you'll owe roughly the amount you originally borrowed (not the purchase price - unless you have a 100% mortgage) plus any fees you added plus any MEAF or similar.

You can either remortgage, switch product with your existing lender or pay it off! Either way, the balance will be as I've explained above.

There's never any obligation to make "repayments you would have paid". You can stay interest only for 40 years if you want and then pay the whole lot off.

BTW I think your auto-sig is out of date as you've now bought your house.

Jammasterjizz

MarkyMarkD is right- if you're on an interest only mortgage there is no requirement to switch to capital and repayment.

However, you will have to repay the loan at some point, so think about over-paying on your interest only mortgage. Most lenders will permit 10% over payments per year- this way you can reduce your overall debt as and when you can afford it.

danm

.....and these are probably things that you should have found out about before making what is probably the single biggest financial decision of your life.....

not having a go, but many people get themsleves in a financial mess by not reading t&c's or understanding what they are realling buying into

Leighthal

Jammasterjizz,I think you might upset a few people by having that link in your sig!

poppy10_2

han2505 wrote: »

WOr can we just pay interest and then at the end of the 2 years just remortgage for the price we bought it at

No, as prices will have fallen by 30%, you will only be able to remortgage for 70% of the price you bought it for.