Switching to an interest-free

ashers1973

My mortgage is due for renewal and due to a change in financial circumstances I am considering switching from a repayment to an interest-only mortgage to reduce our monthly outgoings. If I ask my lender (Virgin) if I can do this, will they treat it as a new application and want more information about my current earnings, etc? I am worried that if I do this, they will consider me ineligible for any mortgage - repayment or interest-only. I have never missed a mortgage payment and know I will continue to make my payments, but on paper I worry that my reduced income will render me a risk and they will not allow me either to renew my current mortgage or switch to interest-only. Am I safer just to keep quiet and do the online transfer to a similar repayment product?

[Deleted User]

Virgin have quite a strict criteria for interest only on new applications. I would assume the same for switching internally.

Residential Interest Only key criteria

Maximum 75% LTV (65% if repayment vehicle is sale of property)
Applicants must have a combined minimum gross income of £75,000 (including 100% of additional income such as bonuses, overtime etc)
Applies to interest only and part and part loans
Maximum income multiple of x4 (based on allowable income). Applies to interest only and part and part loans
Minimum £300,000 equity where using sale of mortgaged property as repayment vehicle
Capital raising for debt consolidation is not permitted
We do not currently offer interest only mortgages to first time buyers

Do you meet the criteria?

If not then you may be able to get a temporary interest only loan by claiming hardship but id imagine you would need to be pretty much in arrears before they would do that.

They would definitely check your circumstances but if you dont qualify then you already ave a mortgage so you can always just do the online transfer and be done with it. They cant exactly get rid of you now

dimbo61

Have you looked online what new deals they have for existing customers ?
You may find a better mortgage deal than you are currently paying with Interest Rates at an all time low.
Asking to go Interest Only will ring Hugh Alarm bells.
Your number one priority should be keeping a roof over your head
So check out retention deals for existing customers !
Consider other ways to save money after you get a cheaper remortgage deal with Virgin.
Shop round for broadband and mobile phone deals, home and car insurance, shop at cheaper supermarkets, staycation in the UK , Primark and everything else that is MSE !

csgohan4

the debt free wannabe forum is great, post a SOA and drive down your outgoings

Thrugelmir

ashers1973 wrote: »

My mortgage is due for renewal and due to a change in financial circumstances I am considering switching from a repayment to an interest-only mortgage to reduce our monthly outgoings.

Would this resolve the underlying issue or merely compound it. Is extending the mortgage term while remaining on a repayment basis be an option.