INTEREST ONLY REPAYMENT

helpme49

Good morning, Everyone,
I am looking for some advice we have a 10-year mortgage on a flat with only 2 years left on it and my husband and I are very shocked to have just realised that it is only interest only payments, so we thought it would be coming down slowly it hasn't been. What we want to know is what is the best to do, do we pay some of it off to reduce the monthly payments and is it possibly to change it.
thanks, in advance for any help

simon_or

If you can meet bank criteria and affordability to borrow the outstanding mortgage amount on a capital repayment basis, then you should be able to remortgage.

Speak to your bank and then to a broker to get a proper idea of your options. If you are very comfortably able to remortgage and are currently on a good rate then it might be better to stay on this mortgage, keep overpaying and then revisit the issue in a year's time.

dunstonh

You can leave it on interest only and start making overpayments.  Although with just two years left, that may be difficult to clear depending on your finances.

You could remortgage to another lender and reset the term.  The existing lender may authorise that as well.

Strummer22

I'm curious as to why you only just realised it's an interest-only mortgage. This should have been made abundantly clear to you when you took the product out. Was an interest-only mortgage suitable for your circumstances when you took it out? Is it possible it was mis-sold?

helpme49

Just a shock to us we really never thought our mortgage was this type

hildosaver

helpme49 said:

Just a shock to us we really never thought our mortgage was this type

I think you need to ensure you are on top of stuff like this in the future, it is incredibly important. Did you not think your mortgage payments were lower than you would have expected? Did you not read your yearly mortgage statements?

simon_or

Strummer22 said:

I'm curious as to why you only just realised it's an interest-only mortgage. This should have been made abundantly clear to you when you took the product out. Was an interest-only mortgage suitable for your circumstances when you took it out? Is it possible it was mis-sold?

That's a very good point. If you were advised to take out an interest only mortgage in 2014 (is that when you first took out the mortgage?) with a mere 10 year term, the bank adviser or mortgage broker would be expected to jump through a lot of hoops before advising you to get this.

At the very least they should have ensured that you have a solid repayment vehicle to pay off the capital in 10 years time.

It might be worth trying to dig out the paperwork to see what was discussed at the time.

PK_London

Its a bit of a shame with interest rates near practically zero you didnt use this as an opportunity to pay down any of the capital. I think you really need to speak to a financial advisor because if you have gone from near zero interest repayments for the last 8yrs, you're now going to be coming into a world where 6% rates on a repayment plan are the norm. That's quite the payment shock. Have you looked at the repayment rates available to you and have you worked out whether you can actually afford them? 

helpme49

Thank you for all your comments all true, I do believe we were mis sold this mortgage entirely, it is putting years on me personally , I think we have paid 60,000 for interest only 

TadleyBaggie

So what happened in 2014, was this a remortgage with your existing mortgage company or something else?

Zoe02

helpme49 said:

Good morning, Everyone,
I am looking for some advice we have a 10-year mortgage on a flat with only 2 years left on it and my husband and I are very shocked to have just realised that it is only interest only payments, so we thought it would be coming down slowly it hasn't been. What we want to know is what is the best to do, do we pay some of it off to reduce the monthly payments and is it possibly to change it.
thanks, in advance for any help

That is really strange that you were not aware you were not making repayments in 8 years.

Did you get annual mortgage statements?

Is this a residential property or BTL?

You will have to find a way to pay the mortgage or get a repayment mortgage once this ends.