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Interest Only Mortgage
mb6
Posts: 1 Newbie
Hello
I keep hearing about interest only mortgages and potential shortfalls and should the lender have done more? I took out a repayment mortgage in 2007. Due to my redundancy in 2009 and the birth of our son someone suggested that to help a little financially we could change our mortgage to interest only as that would considerably lower the monthly payment. I called my lender to check if this was possible and they did it instantly whilst on the phone to me without actually making sure I had a mechanic in place to cover any shortfalls. I am still only making the interest only payments every month and cannot afford to increase our payments yet,I guess we have to some degree got accustomed to only paying this, had my lender at the time disallowed me to do this unless I had an alternative plan in place I am sure things would be different. Can anyone advise if I have any ground for complaint?
I keep hearing about interest only mortgages and potential shortfalls and should the lender have done more? I took out a repayment mortgage in 2007. Due to my redundancy in 2009 and the birth of our son someone suggested that to help a little financially we could change our mortgage to interest only as that would considerably lower the monthly payment. I called my lender to check if this was possible and they did it instantly whilst on the phone to me without actually making sure I had a mechanic in place to cover any shortfalls. I am still only making the interest only payments every month and cannot afford to increase our payments yet,I guess we have to some degree got accustomed to only paying this, had my lender at the time disallowed me to do this unless I had an alternative plan in place I am sure things would be different. Can anyone advise if I have any ground for complaint?
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Comments
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No. It seems they did you a favour, rather than let you struggle and end up in arrears or being repossessed.
But start making plans to repay. Their goodwill won't last forever.0 -
What complaint are you alluding to? Would you rather they not put you in a I/O and repo your house as you can't afford it?"It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
what would the alternative have been? would you have rather been repossessed 11 yrs ago?
With the increase in house prices they did you a massive favour. If you have not made attempts to start paying down the balance then I would start doing so nowI am a Mortgage Adviser
You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
One of the common methods to repay an interest only mortgage is to downsize and certainly start knocking down the balance your lender may allow you to convert a certain amount to repayment which would help you really need to make a plan.0
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Until recently, I had an IO mortgage for 12 years (Nationwide). I was getting regular letters reminding me that I should have a plan in place to repay, or to contact them to discuss. Did you receive anything like this? I think the term 'interest only' is pretty self-explanatory though.0
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Can anyone advise if I have any ground for complaint?
Yes you do but you would have to post it to yourself as you are the person you would be complaining about.they did it instantly whilst on the phone to me without actually making sure I had a mechanic in place to cover any shortfalls.
If the point of moving to interest only temporarily was to aid affordability then there would be no need to put a repayment vehicle in place and it would be silly to do so. A repayment vehicle+interest only would cost about the same as a repayment mortgage. So, it would not achieve your objective.had my lender at the time disallowed me to do this unless I had an alternative plan in place I am sure things would be different.
Time for you to grow up and act like an adult. You made the request. You knew why you were doing it. You know the position you are in now. So, do something about it and take responsibility for your actions.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I am still only making the interest only payments every month and cannot afford to increase our payments yet,I guess we have to some degree got accustomed to only paying this,
Then what grounds for complaint do you have? What's your plan when interest rates rise?
In many ways you've been fortunate. I fear that you are heading towards a cliff edge. Without some some form of action very soon. The answer to your question lies elsewhere on this forum I suspect.0 -
No you don't have grounds for complaint. I know a few people who did as you did. They know at some point the mortgage needs repaying but are counting on windfalls/inheritances to solve their problem. A bit like you really in sticking their head in the sand. I would suggest you get some quotes for converting back to repayment even if it means extending the term depending how old you are.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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Yes you do but you would have to post it to yourself as you are the person you would be complaining about.
A splendid start to the day - thanks for this Dunston.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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