Interest Only vs Repayment

dosh1

I can overpay if I continue with the Interest Only mortgage as the monthly repayments are much less than a Repayment mortgage.

If I take out a repayment mortgage I will not have any spare cash to overpay with.

enthusiasticsaver

The thing is the mortgage will need to be repaid at some point so you may as well either overpay or convert to repayment mortgage. There is a reason why interest only mortgages are frowned upon and it is because having no definite repayment vehicle in mind it is easy to get to the end of term and have no way of paying it off. So the "spare cash" you have should really be going towards some means of paying off the mortgage and is not spare at all.

If your savings are earning more than 1.75% there is a case for continuing to save for now until you are forced to repay the mortgage. This means you having the discipline though of not considering this as money you can spend as it is earmarked for the mortgage.

Unless you can move to another lender without paying fees (unlikely) then I do not see the point of moving lenders for the last 2 years of the mortgage. It is only worth keeping the mortgage open if you intend borrowing again at some stage in the future.

What you do now depends on how much your mortgage is and what interest your savings are attracting and how much you can overpay without incurring a penalty. My personal preference in your shoes would be to overpay the maximum which is usually 10% with no penalty and when the fixed rate expires look at the deals available and decide then when you have all the facts. You can either stay on svr and overpay as much as possible to clear in next year or two or go for fixed rate for two years, convert to repayment and clear it in two years.

getmore4less

until you come up with some facts like lender and rates you cant quantify anything