Mortgage Charter - Interest Only - does mortgage balance increase after 6 months

stygian66

I have had a reduction in earnings, which I hope is temporary and I have spoken with my lender today who is signed up to the Mortgage Charter. The 6 month interest only option would give me some breathing space to get my finances in order and get them back to previous levels. When explaining this option, the advisor explained after 6 months payments would increase which I undertstand as the outstanding balance would need to be cleared in the original timescale. However, she also insisted that the balance would increase by the amount of missed capital payments in that six months e.g. if capital element was £1,000 I would be adding £6,000 to the outstanding balance. This makes no sense to me as I understood interest only would keep the outstanding balance the same. This would be a double hit after the 6 months which would seem to not be what the Charter was intended for. Can anyone advise or explain who is right.

Hoenir

The customer service agent has misunderstood. They would be confusing matters in a relation to a mortgage holiday. Where neither interest or capital is repaid. Then the outstanding balance increases. 

Whatever capital is deferred over the six months. Will be repaid over the remaining months of the contractual mortgage term. 

ACG

Worrying when one of the people advising customers doesnt have a clue on something so important!
Your balance wont increase as you rightly say, you are paying the interest. The repayments will (as you say) increase to ensure the balance is cleared by the end of the mortgage.