to change my morgage to Interest Only?

[notanumber]

We bought in August 2007 (so right at the very top of the market, the month before it all went to shit).

Flat bought for £210,000, similar flats on our road now going for £180,000.

We had £30,000 deposit so our morgage was for £180,000. The morgage is probably now about £176,000.

We hate living here (wide range of reasons) but looks like we're fairly stuck here as can't upgrade as all our deposit was swallowed in the housing market crash.

It seems to me that the only thing that will make any difference to whether we can sell up and move is the is the market recovering a bit. Anything else we do in terms of paying off the morgage is just pissing in the wind - I mean four grand we've managed to pay off in three years - at that rate we'll be stuck here til we die.

Would it be madness to switch from our fixed rate to an interest only morgage? We'd put the money we'd be saving (wouldn't be much - a couple of hundred a month I imagine) in an ISA or something and start the process of saving again for a deposit, with a view to eventually letting out our current flat and buying a nicer one for us to live in, or even us renting somewhere nicer?

I don't know if this is financial madness or not. I know interest only morages are usually viewed as Very Bad Ideas, but I can't see that what we're currently doing is going to get us out of here anytime fast.

Would appreciate your finanical wisdom.

Not a good idea if you are already 30k down.You are efectively renting from the bank with all the responsibilty of mintenance etc.It also means that when you do sell you will still owe the capital and if prices fall further which they may well do next year you could owe more than the flat is worth.I would keep going as you are tbh and that way at least what you owe is going down.There is a slight bubble in prices atm but I am in the south east and things are selling for good prices atm but according to local agents they expect falls after the election

If you want to move, you might be better of saving some funds to go towards a deposit for somewhere better. In parallel as you save, the value of your flat will slowly return to a level closer to what you paid for it.

If this was a flat for a lifetime, I'd say pay it off. But you might be better off doing this (and getting a lower rate in the process) and then seeing what else you can do.

So long as you are not losing money, the most important thing is to be happy where you live

Also it would all depend on whether you could physically do the change...when we tried to change ours with Nationwide we were told that we needed at least £150k equity in our house to qualify...yeah right...

I wouldn't have thought that you would be allowed to change your mortgage to interest only considering that you are in (or almost in) negative equity. I don't think you will able to change mortgage provider either as you would be looking for a 100% mortgage. It would be worth speaking to a mortgage advisor to find out what you option are.

Hmmm...This is sounding more depressing than I had anticipated. Bloody hell.

you can't get interest only deals at the moment unless you have loads of equity, but you can increase the payment term (up to 35 years), which is almost the same thing in effect.

In my opinion, it makes sense to do this because you are unlikely to be able to draw down anything on your mortgage in an emergency (because of lack of equity and tight credit), so it is a good idea to put aside some money into a savings account.