Interest only surprise

JustAnotherMuppet

To cut a long story short, I've just found out/remembered that my mortgage is an interest only one. On a SVR. So two bad points there. Its been interest only for perhaps 10 years. I know that is really bad.

I've run one or two of the affordability checks and I'm failing them due to outstanding debt - I have an excellent credit rating, have never missed a single payment on anything, its just the amount outstanding that is the issue I believe. The biggest single item is a loan which is due to end in 3 years. So I'm in a position where I want to convert to a fixed rate capital & interest mortgage, but need to extend the term so that it runs til I am 70 (or older).


Its a relatively small mortgage - £80k outstanding on a property with a value of maybe £120k, so looking at approx 70% LTV.


Can you suggest a broker/lender who is amenable to someone in my (stupid stupid) position please. I'd really appreciate it - I have the runs, have been sick and am not sleeping since discovering this! Thanks

[Deleted User]

While you're looking for a repayment mortgage, get on and start making overpayments to your existing mortgage.

The sooner you reduce the capital, the better.

AnotherJoe

Have a look at retention deals online from your current lender.

You may be able to go onto a cheaper rate without any further checks.
If you can, do that then start overpaying.

JustAnotherMuppet

Quick update - I've got an appointment with a financial advisor through my union (UNISON). Its 2 weeks off, but at least the ball is rolling.

I've also found that if I include my wife's income in the online calculators, we scrape through, so maybe our situation wasn't quite as dire as I thought...

It is still a serious wake up call though, and I've put a lot of my 'stuff' up for sale - second car etc, in order to clear some debt. You can only leave your head in the sand for so long.

On the plus side, I've probably lost 1/2 stone in weight over the last few days!

foxy-stoat

Each buy £330 of premium bonds each month for the next 10 years. You may be able to reduce that slightly if you get any big wins as time goes by.

amnblog

You don’t need to convert to capital repayment mortgage. You can overpay nearly all interest only mortgages (within limits) to reduce your debt.

Bit baffled why it takes two weeks to talk to a Broker however.

JustAnotherMuppet

Thats something I never even thought about - overpayment. Sometimes the obvious needs to be said - thank you!


My main reason for re-mortgaging is to get a fixed rate for a few years - long enough for me to get my finances back under control (just under 2.5 years actually, when a big loan finishes).


I guess that if I can't get a re-mortgage due to the amount of credit I currently have, I can just overpay as you suggest. So thats another way out for me, thanks.


Thanks

getmore4less

Which lender are you currently with?

What rate are you on?

What retention deals do they have?

Thrugelmir

JustAnotherMuppet wrote: »

To cut a long story short, I've just found out/remembered that my mortgage is an interest only one.

Your lender should have written to you, more than once by now.

zagubov

Be careful with retention deals; some lenders treat a switch from an interest-only mortgage to a repayment one as a totally new mortgage requiring a new affordability check.