How much would switching to interest only save me pcm

longwalks1

If (I’m just doing sums at present), I switch from a repayment mortgage to interest only, how much would it reduce by per month? Details are: 

house value: £560,000
mortgage: £200,000
rate:          1.8%
duration:  unsure
monthly payment: £1,167 pcm

if i switched to interest only, what would my repayments be each month please? Approx 

[Deleted User]

£300/m

Write more as msg too short

longwalks1

Many thanks Deleted_User, I guess I was overthinking/daydreaming earlier.  My details above, I think I have 17 years remaining, possibly (without checking). 

I was thinking, the £867 saving per month (approx), if that was saved each month into a moderately adventurous fund, with compound growth of 8% a year I was roughly calculating I could clear the outstanding debt by year 11.  So 6 years earlier than my current repayment mortgage. (I know there will be many variables) 

Probably too much day dreaming.  Ive recently started learning more about my SIPP and looking into other areas of finance in my life to see if it can be improved.  

dimbo61

The only little problem with your idea is getting an Interest only mortgage !
Very few IO mortgages now available for residential mortgages 

Thrugelmir

britishboy said:

I was thinking, the £867 saving per month (approx), if that was saved each month into a moderately adventurous fund, with compound growth of 8% a year I was roughly calculating I could clear the outstanding debt by year 11.  So 6 years earlier than my current repayment mortgage. (I know there will be many variables) 

40 years ago endowment mortgages became the preferred route for paying off mortgages. As the projected investment returns were to good to miss out on......... History tells a very different story. 

csgohan4

your not really saving OP. Your kicking the can down the road the interest rolls and adds on alot over the term of the mortgage, so you will pay alot more sadly. 

Do you have an exit pay it off?

longwalks1

dimbo61 said:

The only little problem with your idea is getting an Interest only mortgage !
Very few IO mortgages now available for residential mortgages 

Thanks dimbo - had a look on Barclays last night (when I couldn’t sleep) who my current mortgage is with and it appears I need to earn £75k a year or more for an interest only mortgage

longwalks1

Thrugelmir said:

40 years ago endowment mortgages became the preferred route for paying off mortgages. As the projected investment returns were to good to miss out on......... History tells a very different story. 

Thanks again Thrugelmir - makes sense, I’m slightly too young to remember endowment mortgages but remember a lot of the slightly older guys (in their late 50’s now) moaning about them in work years ago.  

longwalks1

csgohan4 said:

your not really saving OP. Your kicking the can down the road the interest rolls and adds on alot over the term of the mortgage, so you will pay alot more sadly. 

Do you have an exit pay it off?

Thanks csgohan4 - my (potential) exit plan was 2 part.  The savings I make each month on being interest only would either be to clear the balance earlier, or (more likely) use that saved money in an ISA to allow me to retire earlier than 57 (I wanted to be 55 but am not 55 before 2028) and use part of the lump sum from my SIPP to clear the remaining mtg balance

getmore4less

britishboy said:

If (I’m just doing sums at present), I switch from a repayment mortgage to interest only, how much would it reduce by per month? Details are: 

house value: £560,000
mortgage: £200,000
rate:          1.8%
duration:  unsure
monthly payment: £1,167 pcm

if i switched to interest only, what would my repayments be each month please? Approx 

16y 6 months.left

amount	rate	payment	owing
£200,000.00	1.80%	£1,167.00	£291.84

Pension is possibly a better route than ISA


1.8% is quit a high rate for <50% LTV

longwalks1

getmore4less said:

16y 6 months.left

amount	rate	payment	owing
£200,000.00	1.80%	£1,167.00	£291.84

Pension is possibly a better route than ISA


1.8% is quit a high rate for <50% LTV

Thanks getmore4less - do you mean it’d possibly be better to pay into my pension than an ISA? 

My own personal SIPP and smaller employer DC pot and fairly healthy already for my age, which is why I’m looking at ways to build a decent amount in an ISA to bridge the gap between stopping work and drawing my SIPP as soon as I can (currently 57, unless the government change minimum age again)