Interest Only or Repayment Mortgage ?

tashybart123

I am currently on an interest only mortgage and want to start paying off the capital. My current interest only rate is 4.74% but my current bank has offered me a better interest only rate of 3.99% with no set up fee.

I have also found a fixed rate mortgage deal with another bank for two years at 1.99% no set up fees. Can anyone tell me if after two years if I took the fixed rate repayment mortgage would I have paid off any of the capital or would I be better taking the lower interest only rate and making over payments of £300 a month ? Thank you in advance for your advice.

[Deleted User]

A repayment mortgage pays off the capital.

getmore4less

The rate determines the interest, the payment you make determins how much capital you pay off.

Once you go to a repayment mortgage there will be no going back(for now) and the contractual payment will go up.

if you go to a product with a term shorter than the full term you need to look at the followon rate.

is 3.99% the only option your cuurent lender will give you?

You could post the details : lender, amount, term, income and LTV.

Might throw up some options.

amnblog

Your current lender is offering to charge you twice what the new lender is expecting to charge you.


If you can afford the cash-flow on the repayment mortgage, that is the way to go - and that is the long and short of it.