Remortgaging from Interest Only to Capital Repayment

nathbentley

If I have an interest only mortgage, then 2 years down the line, I remortgage to a capital repayment mortgage and my house is the same value. Do I need to find additional deposit, or do I get my original deposit back?

Say it’s 100k, I put down 25k, then I borrowed 75k. After the two years, am I remortgaging to a capital repayment of 75k or 100k?

Edi81

You are converting your existing loan of £75k which is interest only to a repayment loan of £75k.
The deposit is part of the equity in your property.

nathbentley

Edi81 said:

You are converting your existing loan of £75k which is interest only to a repayment loan of £75k.
The deposit is part of the equity in your property.

Thank you so much for confirming. Just to understand, the position would be, when I come to remortgage on a capital repayment on 100k. I would take the property value of 100k, and have 25k equity in the property, which would therefore be my deposit and would continue the loan on 75k? 

Even though it’s a interest only mortgage to start off with? I have been given advice that it would unfortunately go and I’d need to find 25% deposit.

thanks.

housebuyer143

nathbentley said:

Edi81 said:

You are converting your existing loan of £75k which is interest only to a repayment loan of £75k.
The deposit is part of the equity in your property.

Thank you so much for confirming. Just to understand, the position would be, when I come to remortgage on a capital repayment on 100k. I would take the property value of 100k, and have 25k equity in the property, which would therefore be my deposit and would continue the loan on 75k? 

Even though it’s a interest only mortgage to start off with? I have been given advice that it would unfortunately go and I’d need to find 25% deposit.

thanks.

You don't lose your equity. You just take out the new loan for the same value of the old loan and carry on.

That being said, you don't need to convert it to repayment. You could just overpay each year or month to clear to capital owing - that way it's like a repayment mortgage. That way you are only committed to smaller payments in case of hard times. 

Edi81

who has given you that "advice"? 
but as house buyer says...you can just make payments toward the capital on the existing mortgage

nathbentley

My mortgage broker gave me that advice 🙈Edi81 said:

who has given you that "advice"? 
but as house buyer says...you can just make payments toward the capital on the existing mortgage

housebuyer143

nathbentley said:

My mortgage broker gave me that advice 🙈Edi81 said:

who has given you that "advice"? 
but as house buyer says...you can just make payments toward the capital on the existing mortgage

Please get a new broker. That being said he might know something we don't, but you never lose equity unless your house value drops.

JMA74

Nothing to add really but confirming housebuyer is bang on the money. Your deposit is still there as long as the house price hasnt dropped. 

If the property value has gone up then you add that increase on to get your new equity amount.