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anyone know anything about mortgages???(18 Posts)
what do you mean 'affect?'
are you putting anything towards repayment of capital during those 3 years or just paying interest? If just interest, it will obviously take longer to pay your mortgage off - you'd have to ask the lender to calculate how much longer.
can you ask the mortgage advisor to explain more? is s/he an independent one?
if you aren't paying off any capital for the first 3 years, you're obviously going to have more capital to pay off later though.
I think you will find that an interest only mortgage could be worse as the payments change as the interest rises/reduces etc... My mortgage has just risen by £120 per month of which i cant afford so i am now changing to a fixed rate which works out cheaper in the long run and also includes the interset for a period of 2,3,4 or 5 years and doesnt rise throgh this period and also is'nt added to the end of your mortgage payments depending on the companies terms and conditions. It may well be worth looking at.
would you be paying into a separate policy for those 3 years? (sorry, am obviously being a bit slow)
if they can't give you a satisfactory explanation of how it works, it might be worth shopping around a bit though.
No you would'nt as it is all tied together and i am doing mine with the halifax who has been my lender from the start. I started paying on a fixed rate and it was great as it was the same amount for the first 2 years so i have had a year of interest only and have converted back to fixed as it gives me a more stable outlook on my DIAR fianaces!!!
it is a fixed interest rate but also includes a fixed monthly rate for capital which is why mine is combined. and in the event of such rises in interest, the mortgage company are still getting payments on top of the interest.
Have you considered a flexible mortgage? We have one with legal & general (now taken over by northern rock) which is theoretically interest only, but then we choose how much to overpay each month, so if we have lots of spare cash then we bung it in, and if we don't we don't! We can also pull anything that we've paid off the capital back out at any time (v useful for us as we're both self employed so we put all the money for our tax bill into the mortgage account, and then pull it out when the evil taxman wants our money in July and Jan. Meanwhile we save loads on interest).
I think Woolwich do a good flexible mortage, or there's the virgin one (but that can be a bit scary for many people as all your current account and mortgage money is combined), or don't halifax do one now too - the intelligent finance thing or something?
When you switch to interest-only, you are going to have to take out some kind of investment fund to pay off the capital. This may cost you well over £100 a month per £100,000 balance.
was reading orinoco's advice and thinking it spot on... then saw she is a mortgage adviser!
she has it just right (of course) - short term reward = lower payments now, but long term payback = more to pay back over time = costs more in the long run... could mean you retire later, don't have so much money when ds/dd are at uni...
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