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Urgent mortgage advice pls'?
scottishcammy
Posts: 1 Newbie
Hi,
This is our current mortgage details:
Owe £147,000 (£20,000 of which is interest only) at 4.99%.
The 2 year fixed rate of our martgage ends soon.
The house was valued at £167,000 over 2 years ago (so should be worth more?).
we currently pay about £750 / month.
Money is very tight indeed and if we leave it, the new rate will mean we'll have to pay an extra £250 / month (not possible!).
We went to the RBS (who the mortgage is with) and they recommended the tracker AT 5.49% (£787 / month) or their new base rate, fixed at 5.99% (£851 / month).
We were deciding what to do , you know, worried about the tracker / interest rates going up, but also considering the security of the fixed rate, etc.
However, my mate phoned me, we're both in the police, and he was saying his financial advisor gave hime the following advice:
as we are in the unusual position of being guranteed a pension and a tax free lump sum (pension = 2/3 of final salary, current lump sum around = £80,000, but increases every year), he advised to have an interest only mortgage.
On retiring (which is 20 years for me), you can pay off the mortgage with your lump sum and either be assest rich (keep the house) or cash rich (sell the house, keep all the cash from it and 'downsize').
That's what he does and it saves a lot per month.
Now I have no idea what to do!!!
I must stress, money is very tight. We have a big loan that finishes in 7 years and will be much better off then, but at the moment, we've 3 young kids and not much cash.
We're off to see a morgage broker tomorrow and will see what he says, but I would really appreciate any advice as I'm a 'dunderheid' at such things!
WHat do you think?
This is our current mortgage details:
Owe £147,000 (£20,000 of which is interest only) at 4.99%.
The 2 year fixed rate of our martgage ends soon.
The house was valued at £167,000 over 2 years ago (so should be worth more?).
we currently pay about £750 / month.
Money is very tight indeed and if we leave it, the new rate will mean we'll have to pay an extra £250 / month (not possible!).
We went to the RBS (who the mortgage is with) and they recommended the tracker AT 5.49% (£787 / month) or their new base rate, fixed at 5.99% (£851 / month).
We were deciding what to do , you know, worried about the tracker / interest rates going up, but also considering the security of the fixed rate, etc.
However, my mate phoned me, we're both in the police, and he was saying his financial advisor gave hime the following advice:
as we are in the unusual position of being guranteed a pension and a tax free lump sum (pension = 2/3 of final salary, current lump sum around = £80,000, but increases every year), he advised to have an interest only mortgage.
On retiring (which is 20 years for me), you can pay off the mortgage with your lump sum and either be assest rich (keep the house) or cash rich (sell the house, keep all the cash from it and 'downsize').
That's what he does and it saves a lot per month.
Now I have no idea what to do!!!
I must stress, money is very tight. We have a big loan that finishes in 7 years and will be much better off then, but at the moment, we've 3 young kids and not much cash.
We're off to see a morgage broker tomorrow and will see what he says, but I would really appreciate any advice as I'm a 'dunderheid' at such things!
WHat do you think?
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