Interest only or repayment mortgage????

LouBlue

Badger_Lady wrote: »

Ooo, yeah - that too!

Switch the mortgage to interest-only with the flexibility to overpay,

We were on repayment but I then wasn't working for a while so we switched to interest-only. But it is a short-term thing only, I will be switching it back to repayment as soon as we are bringing more money in.

RyanP_2

If you are struggling then the last thing that you want to do is miss any mortgage payments. The beauty of being on a repayment mortgage is that you have the facility to change to a interest only mortgage or you can do part repayment part interest only tailored to what you feel you can afford. You can then change to repayment in the future. Alternatively you can change to interest only and then put any excess funds that you have and put them into an ISA which you can pay a chunk off the mortgage at any given time.
If you are intersest only without a repayment vehicle then you are not paying off any of the capital of your mortgage.

IveSeenTheLight

i_need_help wrote: »

Hi all, I'm struggling slightly with my outgoings at the moment. I own a house and live alone so i pay for everything myself. I was speaking to a friend of mine and he asked whether i was paying an interest only mortgage or repayment, i told him repayment and he said that if i'm struggling i should change it to interest only. His views are why bother having repayment and paying more if you are not planning on keeping the property forever because when i decide to sell it hopefully it will pay for itself. He has always opted for interest only and finds it so much better. I was just wondering what the majority of people do and whether i should switch to interest only.

If you can afford it, repayment is by far the best way to go.
The reason being is that every month, you will owe a little bit less interest and pay off a little bit more of a mortgage.

Even just over the 5 years, you will have paid less interest than your friend (assuming he was on exactly the same deal as you) and built up a bit more equity than him.

Good Luck