Part Interest Only/Part Repayment

smitchy73

Hi,
Looking for some info from the forum.
I have a mortgage with Halifax on the SVR, I have about £45K on repayment, and £30k interest only.
I've made an appointment to see about changing to full repayment, I have no repayment vehicle in place for the I/O part and about 8 years left to run on it.
I believe I will have to go through the affordability checks for this, which worries me, if things need to be cut, then so be it.


Just wondering though what choices I will have?


I know they won't give me a new deal without changing the I/O part to repayment.


What will happen if I fail the affordability checks, will I be able to stay on the deal I am on just now, and hope miracles happen, or will the bank force me to do something else?


Many thanks in advance


Bob

Thrugelmir

Have you considered simply making overpayments on the interest only part. This will at least allow you flexibility as to what you pay off every month. With only 8 years to run. The sooner you start the better. A period of self imposed austerity would kick start the plan.

Alternatively combine the two sub accounts together. Then repay the total balance owed off over a longer period of time, i.e. 10 years. Lender may offer this as an option. To comply with affordability rules. Though will be subject to lending criteria.

smitchy73

Thrugelmir wrote: »

Have you considered simply making overpayments on the interest only part. This will at least allow you flexibility as to what you pay off every month. With only 8 years to run. The sooner you start the better. A period of self imposed austerity would kick start the plan.

Alternatively combine the two sub accounts together. Then repay the total balance owed off over a longer period of time, i.e. 10 years. Lender may offer this as an option. To comply with affordability rules. Though will be subject to lending criteria.

Have been working to pay off my credit cards, cards cut up and no more being added, and reducing balance with any extra overtime etc. Re financed my bank loan last month to allow me to pay off our overdrafts(£1000 on one account and £800 on the other - regularly used) done this due to the new o/d charges being introduced with HBOS, saving approx. £100pm on o/d charges and loan amount reduced.


Thanks for your advice.

smitchy73

Does anyone have anything else they can add at all?

Thrugelmir

When's your appointment with the bank?

getmore4less

see if they will do a retention deal to get the rate down.

stay part/part.

fix your other debt problems first so you know how much you have free to overpay.

no point overpaying the mortgage then finding you need to borrow elsewhere.

debt free wanabee
http://forums.moneysavingexpert.com/forumdisplay.php?f=76


cuurent
£45k 3.74% 8y £543pm
£30k 3.74% 8y £94pm (I/O)
£30k 3.74% 8y £362pm (repayment)

lowest rate option for under £100k 60%LTV is 2y fix(31st Jan 2020) 2.04

£45k 2.04% 8y £509pm
£30k 2.04% 8y £51pm (I/O)
£30k 2.04% 8y £339pm (repayment)


Halifax don't have the best rates on mortgages below £100k.

smitchy73

Thrugelmir wrote: »

When's your appointment with the bank?

Wednesday morning(tomorrow).

Thrugelmir

After that you'll know your options.

smitchy73

getmore4less wrote: »

see if they will do a retention deal to get the rate down.

stay part/part.

fix your other debt problems first so you know how much you have free to overpay.

no point overpaying the mortgage then finding you need to borrow elsewhere.

debt free wanabee
http://forums.moneysavingexpert.com/forumdisplay.php?f=76


cuurent
£45k 3.74% 8y £543pm
£30k 3.74% 8y £94pm (I/O)
£30k 3.74% 8y £362pm (repayment)

lowest rate option for under £100k 60%LTV is 2y fix(31st Jan 2020) 2.04

£45k 2.04% 8y £509pm
£30k 2.04% 8y £51pm (I/O)
£30k 2.04% 8y £339pm (repayment)


Halifax don't have the best rates on mortgages below £100k.

I noticed some of the rates available this morning on their website and even the 5 yr fixed is something like 4.9% for the higher LTV rates, and only when dropping down to below 85% gets you a lower than current rate, of course a lot will depend on what they value the house at, the last one about 9 years ago valued at £95k, means nothing now I guess!

smitchy73

Thrugelmir wrote: »

After that you'll know your options.

Very true, i'll be moving in with the in-laws, lol

smitchy73

Thanks for your assistance to those that did, very much appreciated.

Went to the bank, some good news, some bad news.

We got rejected on affordability for moving the Interest Only part to repayment, however, were able to do a new rate on the repayment part on a 2 yr fixed at 2.44%.

This brings our mortgage payment down by about £60pm from what we've been paying, so it was mentioned that we can overpay by up to 10% and I know how to set that up, but it was also hinted that with the extra funds it might be wise to clear off some of our cards, I have two and the wife has two, one has a smaller balance than the other in both our cases, and we're targeting clearing the two of those as a matter of urgency, and reduce others without adding to it.
Then in 2 years time we should be in a better place to move the I/O part to repayment.

The other option was to pay in to the I/O part over the two years knocking off about£3-4000 off the total owed, however, we might still have the cards, so I think we challenge those first.