Interest only mortgage

Lorne

Would appreciate some advice please?We have recently remortgaged and taken a fixed rate interest only deal for 2 years, our finances have improved since then and I was wondering whether changing onto a repayment mortgage now is an option? would there be lots of charges involved? Or would we be better popping the extra into a savings account and paying off a lump sum when the mortgage is up for renewal in 18 months?

NeilQuinn

It's normally a one off charge. I paid £75 last year when I did it.

Ian_Griffiths_Halifax

Check your mortgage offer letter and see if your mortgage will allow overpayments without penalty. That way, you can overpay at an affordable level within the limits allowed, and if things change and you need to reduce them again, you can, and there won't be a charge for stopping your overpayments.

dimbo61

hi lorne you did not tell us your mortgage rate and if this is less than
the 6.5% you can get from barclays and lloyds ( £9000+ ) in there ISA,s
then it may pay you to save into an ISA for the next 18 months.
just something to think about !

Lorne

Thank you for your responses, I will check our mortgage paperwork, I am sure that we are able to make some overpayments but I've not looked into the fine print and I've no idea what the cost involved would be so I'll have a look at the charges. our interest rate is less than 6.5% so excellent point about popping the money into savings - hadn't thought about it like that.

Appreciate the advice, thank you

Ian_Griffiths_Halifax

dimbo61 wrote: »

hi lorne you did not tell us your mortgage rate and if this is less than
the 6.5% you can get from barclays and lloyds ( £9000+ ) in there ISA,s
then it may pay you to save into an ISA for the next 18 months.
just something to think about !

A good point if the ISA rate is guaranteed, but as I don't deal in any form of Investments other than property, then I couldn't say.

buglawton

The overpayments suggestion is a good one (you stay in control more) , meanwhile ensure that you pay all your insurances - home, car etc - in advance rather than direct debit. Similarly, ensure that all credit cards are paid off monthly so qualify as interest free money usage. This because they all charge 10 to 20% interest.

Why pay interest at these rates while receiving a loan at say 6%?