interest only or repayment

want2bmortgage3

a few months ago i needed to save some money so i changed my mortgage to interest only for a fee of £75. i'm now back to normal and might as well start paying off capital.

should i switch back to repayment and pay the fee again. or just stay on interest only and make an overpayment every so often?

is it as simple as that or is there anything else i should consider?

Spudwud

Your lender will have a limit on how much you can overpay, so it won't be as simple as overpaying every month.

If you plan to live in this house and see it through to the end of the mortgage term, I strongly suggest you switch back to repayment or take measures to ensure you can pay off the capital once the mortgage term comes to an end.

It's easy to enjoy the extra money you'll be saving while on interest only, but it really is false economy.

sparvar

Mortgage companies tend to front-load interest onto mortgages, contact them and pay as much as you were paying before, you'll be surprised how quickly the capital shrinks and your interest charges get smaller.

Emmalou

If mortgage companies tend to front-load interest onto mortgages, does that mean it is better to make regular overpayments, rather than have a repayment mortgage - or doesn't it make any difference?

kingkano

sparvar wrote: »

Mortgage companies tend to front-load interest onto mortgages, contact them and pay as much as you were paying before, you'll be surprised how quickly the capital shrinks and your interest charges get smaller.

Where did you get this information? I've certainly never heard of that.... you pay more interest in the beginning of a mortgage for the simple reason that your outstanding balance is larger. If you were to repay the loan quicker/pay more capital from the beginning then you will pay less interest.

They do not 'front load' interest charges though.