Interest only worth going for? Help/advice appreciated…

londoncouple_2

Morning. 

We had our house valued last week at £680,000 and have £113,000 left on mortgage. Plenty equity. Current 1% deal ends 2nd Dec. Is it worth considering an interest only with our current lender and see what rates are doing in a year and fix then or is this not advisable? If we did this it would free up cash monthly we need to pay to hmrc as owe them a chunk of change we didn’t know about grrr. 

Any thoughts appreciated, thanks.

silvercar

The only harm is that it doesn’t alter the position that a year later you owe the same amount, but if it works for you due to other factors then go for it.

RelievedSheff

I personally wouldn't go interest only even if only for a short term.

Could you get a short term tracker mortgage instead with no early repayment charges?

housebuyer143

You can look at it, but many lenders do not do it and it need an acceptable repayment strategy which could be downsizing in your case, but unless you are with the tiny few who do these then you will have to move lender to facilitate it. 

amnblog

The earlier you make the capital repayments - the more you benefit from making capital repayments.

The higher the mortgage rate - the more you benefit from making capital repayments.

Therefore going interest only when your rate has risen to perhaps 6% will probably best be avoided.

Postik

Bear in mind you can go interest only and then overpay, making it the equivalent of a capital repayment mortgage.  But this gives you the flexibility of whether you choose to overpay or stick to just paying the interest.