Changing from a repayment to an interest only for 3 years good idea or bad???

Strawberry_3

We are in the process of changing and increasing our mortgage.
Its currently a repayment mortgage, but we are thinking of changing to an interest only mortgage for a short time, between 1 and 3 years.
Ive always been advised to avoid interest only mortgages and Im not sure what to do.

For the next 3 years I will be studying and my husbands wages will have to cover our mortgage, so we want our monthly repayments to be as low as possible.

How would changing to an interest only mortgage affect our mortgage long term?

Ive also extended the repayment term from 17 years to 20, obviously when I qualify we will reduce it and increase our payments.

Are we doing the right thing??

Charlton_Taz

If you change your mortgage to an interest-only the only problem you've got is that obviously you are not paying any capital off in that time. However, after those three year are up and assuming you go back to what you were paying previously under the repayment mortgage you will just end up paying your mortgage off three years later then you orginally would have done.....which is not bad at all if you get the chance now to study something you want to do!

I would just say be sure that you do swap it back to the repayment version as soon as you can, as I guess it can be very easy to delay swapping back to the repayment version as you might get used to the new lower payments under interest-only instead!

meanmachine_2

The only note of caution is that you do have to remember int rates are still historically low.

SO in three years' time you could find yourself jumping from a £500 i/o payment @ 5% to a repayment of £1500 or more on 8% interest, which you will be paying an extra three years on. :eek: