what do you think??

saram613

I currently have a 5 year fixed rate (5.83%) interest only mortgage of £105,000 with Nationwide with 18 years and 10 months remaining. My mortgage payment is £512 and my ISA payment is £125. According to my latest ISA statement from 3 days ago, i have lost £600 since the previous statement 6 months ago.

My goal is to lower the outstanding term and outstanding amount of the mortgage.

What i am considering is cashing in my ISA which has a value of £11,000, i would then use this cash to pay off 2 x personal loans with an early settlement figure of £10,000 between them. This would then effectively free up £560 per month (£125 from the ISA, £217 from 1 x personal loan and £218 from the other personal loan).
I would then switch from Interest only to Repayment mortgage. I know my mortgage payment would then increase but i would have the 'freed up' £560 to utilise and also use to make overpayments.

However, i do not know wether Nationwide would allow me to switch from Interest only to Repayment? Is that still considered a product swop in which case i would face charges which i would want to avoid.

So, if they dont allow me to do this, should i start paying off hopefully up to £100 each month of the capital oweing and how would that compare to reducing the term/ amount in the way a reypayment mortgage would.

I do know that Natiowide allows you to overpay by up to £500 per month and they calculate interest on a daily basis.

Any advise/ opinions would be greatly received. Many thanks...

nrsql

Doesn't seem to be any reason to switch to repayment as you can overpay - gives you more flexibility.
Have you used up the cash isa amount for this year? Would probably be better to pay into a cash isa while you are on the fixed rate but means a bit more admin.
Shares haven't done very well recently so you might just be panicking - saying that they have recovered so now might be a good time to get out - your decision.

Paying off the loans is probably a good idea but what are the early repayment charges?

Remember that once you cash in the isa's you have lost those tax years.
Also if you do this would there be temptation to take on more debt and loans?

want2bmortgage3

i would aim to keep things simple, so yeah cash in the isa's and pay off the loans and just have one main monthly outgoing (mortgage). changing to repayment should be simple but they may charge a small fee (northern rock is £75). depends whether you want the hassle of making an overpayment each month or if you want to be paying capital automatically. you could also consider reducing the mortgage term if you have spare money each month this will increase the monthly payment. or if you find the monthly payment too high you could increase the term.

dimbo61

hi saram613
I would cash in my stocks and shares ISA,s ( value can go down as well as up ) pay off both my loans and overpay the interest only mortgage by £500 a
month. put any extra cash into a cash ISA barclays paying 6.5%
In five years you will have cleared £30,000 off your mortgage and have some emergency savings in cash ISA,s and see where the mortgage rate is then.
consider repayment then and shorten term if you can afford GOOD LUCK