Interest Only Mortgage Advice Needed

fuzed

Hi all,

I'm currently on a interest only mortgage with the Halifax/Bank of Scotland.  I'm on a discount tracker at around 1.09 above base which has around 8/9 years left before the end of the term of the mortgage product and am now considering options.  I'm in a flat at the moment but realistically want to sell/move next year (hopefully) if the markets don't crash completely, if that happens and I can not sell I will probably change the mortgage to a buy to let and rent the place out.

With the increase in interest rates I'm seeing my mortgage increase, and am wondering what the best options are for me.
I spoke to my current lender and they have a long wait for appointments so can't see them doing anything quickly.

I have no idea about mortgages and what the best thing to do is. 
I don't really want a repayment mortgage on this place as I would prefer to keep saving to increase the amount of deposit I have.

Should I consider getting a new mortgage deal with a repayment option, or should I start paying a little off on the principle and take a hit on the interest rate hike?

or any other ideas?

silvercar

I’m in a similar position and have decided to do nothing and stick with my tracker deal. Even though rates are increasing it still seems a good deal, I see no point in fixing to what would undoubtedly mean higher payments.

in your situation, where you don’t really know whether you are going to sell or rent it out, I would be cautious about fixing to anything that will limit your options.

Edi81

Switching to a new lender and staying on IO is unlikely. 

Can you log onto your mortgage and see what fixed interest rates are available from Halifax?

housebuyer143

In your shoes I would do nothing. Even if base rate goes to 3% you are still paying less then most fixes on the market. 
You also are unlikely to get interest only again. You sound like you are in a good position and I wouldn't change it. 

K_S

fuzed said:

Hi all,

I'm currently on a interest only mortgage with the Halifax/Bank of Scotland.  I'm on a discount tracker at around 1.09 above base which has around 8/9 years left before the end of the term of the mortgage product and am now considering options.  I'm in a flat at the moment but realistically want to sell/move next year (hopefully) if the markets don't crash completely, if that happens and I can not sell I will probably change the mortgage to a buy to let and rent the place out.

With the increase in interest rates I'm seeing my mortgage increase, and am wondering what the best options are for me.
I spoke to my current lender and they have a long wait for appointments so can't see them doing anything quickly.

I have no idea about mortgages and what the best thing to do is. 
I don't really want a repayment mortgage on this place as I would prefer to keep saving to increase the amount of deposit I have.

Should I consider getting a new mortgage deal with a repayment option, or should I start paying a little off on the principle and take a hit on the interest rate hike?

or any other ideas?

@fuzed You're on I/O, on a decent tracker rate, no ERC and looking to move in the near future (and almost certainly before the term on your current mortgage).

All that considered, you are probably best off sticking to what you have and where possible overpaying the mortgage if you have the spare cash.

If you really want to explore fixed-rate capital repayment options (and perhaps a longer term), given that you're probably on an ERC-free product, it would be wise to look beyond just Halifax and look at the whole market by speaking to a whole of market broker, as you'd most likely have to go through a full affordability assessment anyway for a capital repayment product even if you stuck to Halifax.

The MSE guide here can help you find a whole of market broker.
https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3

fewcloudy

fuzed said:

Hi all,

I'm currently on a interest only mortgage with the Halifax/Bank of Scotland.  I'm on a discount tracker at around 1.09 above base which has around 8/9 years left before the end of the term of the mortgage product and am now considering options.  I'm in a flat at the moment but realistically want to sell/move next year (hopefully) if the markets don't crash completely, if that happens and I can not sell I will probably change the mortgage to a buy to let and rent the place out.

With the increase in interest rates I'm seeing my mortgage increase, and am wondering what the best options are for me.
I spoke to my current lender and they have a long wait for appointments so can't see them doing anything quickly.

I have no idea about mortgages and what the best thing to do is. 
I don't really want a repayment mortgage on this place as I would prefer to keep saving to increase the amount of deposit I have.

Should I consider getting a new mortgage deal with a repayment option, or should I start paying a little off on the principle and take a hit on the interest rate hike?

or any other ideas?

How do you pay back what you borrowed at the end of the term if you are only paying the interest on the loan each month? Sell the flat I am guessing? As I don't think there will be too many endowment policies still out there...

fuzed

Thanks all for the comments.

I am wondering about the monthly increase in Interest rates, I've noticed they are being hiked around .5% to .75%, and could be 1% soon, and I do not see it stopping for a while, well not until inflation is under control.

This is the main reason for my thinking about deals.

I'll be selling it or renting it out over the next year or so hopefully, rental yields are pretty good around where I am, however I would prefer to sell, but we'll see what the markets are like.

housebuyer143

fuzed said:

Thanks all for the comments.

I am wondering about the monthly increase in Interest rates, I've noticed they are being hiked around .5% to .75%, and could be 1% soon, and I do not see it stopping for a while, well not until inflation is under control.

This is the main reason for my thinking about deals.

I'll be selling it or renting it out over the next year or so hopefully, rental yields are pretty good around where I am, however I would prefer to sell, but we'll see what the markets are like.

I have seen many things to say they are expecting it to slow after the next 2 rises.. No one can be sure but you need to remember that a rise to 3% or 4% in the base rate will be like the equivalent of the days when rates hit 15%, because loans and property prices are 10x higher now or more so. 
The government nor the bank of England wish to see mass repossessions or a housing collapse, so you can assume they will consider this. Also as we go into the recession and it takes hold you might find they lower rates to stimulate the economy.. So many moving parts. 

I think you are in a good position and I plan to stay on my 0.89% tracker tbh rather than jumping to a 4.2% fixed. 
Being interest only you can definitely weather the storm better than others on repayment also.