Interest Only vs Repayment

dosh1

Hi

I am hoping I have only 2 MORE YEARS before I am mortgage free.

Current fixed rate expires mid 2018 and is interest only (I have been either putting money away to meet the total sum due at the end or paying off the mortgage in lump sums now and then)

THE BURNING QUESTIONS:

Should I go for a 2 year fixed rate again or variable?

Should I go for an interest only or repayment for the final two years?

If I go for interest only, I am likely to be tied to the current mortgage lender as not too many will now lend interest only. Does anyone know of banks that may consider interest only for a two year period?

May seem strange question but is it a good idea to completely pay off my mortgage in two years time? Some people say it is a good idea to always keep a mortgage as once you pay off, it is harder getting another one. I doubt I want or need another one but you never know?

Thanks

[Deleted User]

The real burning question is how much do you owe? Is it worth paying any fees at all, or it is cheaper to just go onto the SVR?

getmore4less

What is the rate and the 2year fix rate at a retention deal.

dosh1

Deleted_User wrote: »

The real burning question is how much do you owe? Is it worth paying any fees at all, or it is cheaper to just go onto the SVR?

New interest rates are not available to me yet. Currently on 1.75 fixed which is pretty good but previously I have paid £1,000 each time I have had to get a new mortgage rate. I hope to have £30,000 outstanding at the point my mortgage rate expires

dosh1

getmore4less wrote: »

What is the rate and the 2year fix rate at a retention deal.

Rate currently is 1.75 for 2 year fixed rate. Previous setup fee is £1,000. I expect it will be similar but not sure on the new rate yet.

getmore4less

which lender?
what's the variable rate?


30k you don't want to be paying fees
probably should not have paid one last time most lenders have fee/no fee rates

dosh1

I had a significant sum previously and was a little tied because I have an interest only and apart from the bank I have this with I wasn't aware of any other place that would offer the same.

getmore4less

which lender?

Thrugelmir

Why not go for a 5 year fix on a repayment basis. This would allow you to make overpayments still. Without committing to a monthly payment that is unaffordable.

£30k mortgage on an interest only basis for 2 years wouldn't be of interest to lenders nor economic to switch lenders.

dosh1

Thrugelmir wrote: »

Why not go for a 5 year fix on a repayment basis. This would allow you to make overpayments still. Without committing to a monthly payment that is unaffordable.

£30k mortgage on an interest only basis for 2 years wouldn't be of interest to lenders nor economic to switch lenders.

Because I am hoping to fully pay within 2 years so don't want a 5 year fix.

If I go for repayment, I would not be able to afford to overpay.

Niv

dosh1 wrote: »

Because I am hoping to fully pay within 2 years so don't want a 5 year fix.

If I go for repayment, I would not be able to afford to overpay.

Why would you be unable to overpay? If you are expected to be in a position to fully pay in two years why can you not overpay now? If the money is tied up at this time then you would still be able to overpay the max the lender will allow before additional fees in years 3, 4 and finally fully pay off in year 5.


The bonus is even if you are not 'overpaying' in year 1 and 2 you are still repaying some capital so paying back more than you would IO.