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Thinking on switching to interest only mortgage to cut monthly payments - help!!

(9 Posts)
devonsmummy Fri 10-Aug-07 12:15:46

I've always been mrs sensible where mortgages are concerned and interest only were always a big no no. I'm now thinking of changing to one as our monthly outgoings are a few hundred pounds over what is coming in. Has anyone got/had an interest only mortgage and if so does the amount you owe go up drastically in the first 2 years (am thinking may go for it for just 2 years) any advice....? Thanks

Tortington Fri 10-Aug-07 12:17:36

i dont know for sure but i rckon its likerenting your ownhouse for a while - nothing will come off your mortgage.

Tortington Fri 10-Aug-07 12:18:11

so after the two years either you will have to extend your term - for another two years - or pay more to cover the 2 years payments you didn't make

tiredemma Fri 10-Aug-07 12:18:27

we have just come off an interest only onto a repayment.

An extra £227 a month-

my2cherubs Fri 10-Aug-07 12:21:24

i've got one. we are hoping to get back on repayment when little ones are both at school in a couple of years and I can work full time but if the interest rates keep rising who knows? I don't let it worry me too much, at the end of the day it's still our house, still going up in value and hopefully we'll still have a 25 year term left when we switch so we will be able to afford repayments. Worse case scenario my children will be over 25 when mortgage ends so we could always sell up then. At least the house will have seen the children through to adulthood. No-one knows what's round the corner and you really have to do what's best right now. Far better than getting into debt imo.

devonsmummy Fri 10-Aug-07 12:22:55

thanks tiredemma - £227 a big saving if going from repayment to interest only. i suppose thats the thing going back to repayment - a bit of a shock on the pocket.

TwoToTango Fri 10-Aug-07 13:39:52

When we took out our interest only mortgage we had to have an endowment policy as well - doesn't it work like that anymore?

CarGirl Fri 10-Aug-07 13:46:27

When your children leave home would you be able to downsize to a smaller/cheaper property or relocate to a cheaper area - if so then that is also an option.

Is your income likely to increas in the future to go back onto repayment?

How long is the term of your current mortage 15/20/25 years - could you extend to 30 years?

CarGirl Fri 10-Aug-07 13:47:54

Few more questions.....

How much do you owe

What is your house worth now

Can you make overpayments without penalty and can you get the money back if you need it?

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