Help! Remortgage Interest Only Confusion

tightasagnats

My current fixed rate, self-cert Interest Only mortgage ends June 2008. So I shall be looking to remortgage. I am somewhat confused though over what happens if I remortgage - as I am only paying interest at the moment - when I remortgage do I have to pay any capital to the lender I started with?

Say I have 150,000 mortgage with B&Q. I've been paying interest each month. Lovely. I still owe them 150,000 (not so lovely). Now I remortgage, presumably still for 150,000 right? Since no capital has been repaid?

I want another interest only mortgage by the way.

HELP!

T

silvercar

Say I have 150,000 mortgage with B&Q. I've been paying interest each month. Lovely. I still owe them 150,000 (not so lovely). Now I remortgage, presumably still for 150,000 right? Since no capital has been repaid?

correct.

At some point you are going to have to consider how you will repay the capital.

tightasagnats

I have considered that and I am saving in an ISA.

So, ideally, I want to remortgage, but not starting from scratch. If I don't pay anything off the capital to the original lender when I remortgage, I'll just be starting another 150000 mortgage presumably over the same period as I was 2 years ago (as I don't wish to increase my monthly payments more than the increase that is likely due to higher interest rates) and the interest payments will have been for nothing?

I'm a bright girl, but I really seem to be missing something here.....if I stay with B&Q and do not remortgage, the term of the loan remains but I just pay more interest. If I remortgage, I lose out unless I pay off some capital. What would be the point of remortgaging with an interest only mortgage (if I don't pay anything towards the capital)?

T

Dan_Collins_2

With interest only your mortgage payment is just interest, so it will be the same if you have a 5 year mortgage or a 100 year mortgage. Keep a close eye on that ISA, one of the IFA's may put me right but I would not want to rely on one to repay a mortgage of that size!

It only takes Labour to be voted out and bang the new party will want a new toy! Remember TESSA's?

tightasagnats

Thanks I know it's risky, but I did it because my some of my pay is not regular throughout the year and I get lumps of money, and it enables me to have some flexibility!

Dan_Collins_2

Ah, that sounds better. I have many clients that take interest only and pay it off with a bonus or two. One of my very lucky clients paid his mortgage off just two years after I arranged it and he said his bonus was a little light that year!! LOL if only!

tightasagnats

I wish My lumps of money are rather smaller!