Moving from Interest Only Mortgage

Hevs75

Hi, I'm trying to help my friend who has an interest only mortgage and wishes to change this, the mortgage outstanding is £45k, she has a very good credit rating but her husband doesn't, though the mortgage is in her name only. It may sound daft but I think she is scared of dealing with this as she has had this mortgage for a long time but of course has only paid interest on it, I'd love to be able to help her with some advice and thought someone on here may be able to offer some basic advice. 
I'm thinking she should start by seeing an independent mortgage advisor or financial advisor ? 

simon_or

Speaking to a broker (not a financial advisor, that's a different creature) would definitely be a good thing to do. There's no point going door to door with banks as brokers will have access to almost all of them and there are plenty of brokers that do not charge a fee.

If there is a sufficiently long term remaining, and the interest rate you're on is decent, then you can always treat the interest only mortgage like a capital repayment on, by making overpayments. This might well be the better option if you're on one of those pre 2008 attractive tracker rates.

If the term is almost up then yes you do need to look at a remortgage with an extended term. Depending on how old you are, and your income, it could even be something like a Retirement Interest Only mortgage.

tacpot12

A starting point is to investigate what her original plan was to pay off the mortgage. If the plan was to downsize, then there might not be any assets that can be used, but if she had an investment, it might be wise to keep the interest-only mortgage going and to plan to liquate the investment in a few years time as the markets are currently somewhat depressed.

If she wants to see if she can get a new mortgage, seeing an mortgage broker would not be a bad idea, but she (or you) might look to see whether she can qualify for a repayment mortgage directly from a retail mortgage lender.