What to do?

Deeping_Dave

Hi there,

I’m currently on an interest only mortgage. Owe £175k and got 5 years to repay. I can’t turn it back to repayment as I just couldn’t afford it over the term left. I also have the problem that I’m paid mainly through dividends from my own limited company and I’m not sure whether I could secure that much if I remortgage. Recently the company has done well. I’m thinking of taking out a chunk of money say 20k and paying it off of the mortgage which I’m allowed to do without charges. Would this make much difference to the interest though or would it be better to start paying monthly on the repayment rate which I believe is in excess of 3k! If my work goes quiet I can’t afford to continue the monthly payments once the initial 20k runs out. I’m just trying to save on the interest and not sure what the best way to go about it is? I have a call with the lender next week and will begin the process of trying to re mortgage but don’t hold out much hope. Hope that makes sense! Obviously I’m also aware of the tax implications of taking the money out of the company as it’ll again be shown as a dividend. 

silvercar

Depending on your age, it may be possible to find a new mortgage with a longer term. This would make the repayments more affordable  as you would be paying back over a longer term.

ACG

Im self employed and I just take money out of the business as and when I need it. 
I did my mortgage over 35 years for probably similar reasons that you went interest only - ie lower contractual payments and I can overpay as and when I want. 

You have 5 years to try and clear £175k. Thats £35k a year on top of your normal repayments. 
The sooner you pay a chunk off the balance the sooner you stop paying interest on that part of the mortgage. Its worth doing, unless you can get a better rate (after any taxes due) on a savings account.