Mortgage interest rates on Interest only Mortgage.

Maharg2

I need advice regarding a mortgage. An interest only £220,000 mortgage from 2007, just pre crash. I'm 63 living on a private pension.

For the last 14 years the repayments have averaged £240 per month but in February it changed, nearly every month, October's will be £508 with Base rate of 2.25%. This is still manageable. No complaints.

But, if the rate reaches the predicted 6% the monthly repayment will rise to around £1300 per month. 

That's £270 per month to £1300, That I cannot do.

Because the mortgage is just pre crash the property is still barely in positive equity which limits remortgage options and as prices fall this will get worse. The investment intended to clear the loan in 10 years isn't yet able.

 I really don't want to but Is it time to sell?

MovingForwards

Ask in this section:
https://forums.moneysavingexpert.com/categories/house-buying-renting-selling

MSE_ForumTeam5

Moved to the Mortgages board

dander

Not an expert by any means so I'm more asking questions than giving answers...

With an interest only mortgage you keep on paying interest on the full £220k rather than a diminishing balance, so those interest payments stay quite big. Is your investment vehicle something that's accessible now where you could pay off a chunk of the balance and remortgage on a repayment mortgage - which would hopefully reduce the interest component of your mortgage (but add a repayment chunk in) and make you less exposed to the changes in interest rates?

jimjames

Can you switch to a fixed rate so you know exactly what you will be paying?

MWT

Maharg2 said:

The investment intended to clear the loan in 10 years isn't yet able.

How far short is it, and can it be accessed at this time?

Is there any Early Redemption Charge on the mortgage?

Do you actually want to staying in the property for the long term, or were you planning to down-size/relocate in a few years time?