Can someone explain this mortgage issue to me?

[DungunGirl]

Hi ladies

Was wondering whether there is a knowledgable lady on here that can help me out.

I have a 2 part mortgage and the interest only part is due to end soon. So I am planning to just ride the banks base rate as it is lower than the interest rate I had before anyway.

Now, if it is an interest only mortgage, will it stay that even when reverting to the standard rate?

I would really like it to change to repayment.

Anyone?

Yes it will but you can (presumably, if you have enough equity)) just change it to a repayment mortgage if the term is ending.

Sorry - pressed go too fast. Obviously you may then be liable for any charges involved in setting up a new mortgage.

Thanks Headless...I had a feeling that would be the case...rude words. Ah well...will just have to live with interest only until the other part of the mortgage is ending..then I can lump the whole lot into one repayment.

Thanks!

Not sure what the value of the equity has to do with it ? Nor would I expect a change from repayment to interest only to be treated as a new mortgage ?

I think you'll find if you speak to your lender they will be happy to accept a change to a capital and interest basis - after all this means you'll be paying them more money !

or is it possible to make overpayments? It often is after an initial period. Check your terms and conditions, then you can treat it as a repayment mortgage from your perspective.

Check first though, as there can be penalties for overpaying on some products.

My mortgage provider wouldn't switch interest only to repayment when the last deal came to an end, and if we had changed the type of mortgage at the end of the discount term they would have needed a new application, new fee etc (even though we actually paid off £200,000 at the end of that discount period)as it happened I like interest only, paying chunks off as and when but do be aware that sometimes mortgages are new when you just change the payment terms.

Ican'tbelieve - Only because it is in effect taking out a new mortgage (it's a different product) and if the OP took her last one out when conditions were more favourable, that might have an impact.

I have just changed my mortgage from one kind to another with the same provider and had to pay and it was the same with the last one I took out (I change my mortgage every two years).

You are saying the interest only part of your mortgage is coming to an end soon and you expect to carry on payments with the mortgage reverting to the lenders standard rate.

Unless I have mis-understood, what your lender will expect to happen when your interest only mortgage comes to the end of its term, is you to hand over a cheque to pay off that part of the loan.

If you are not in a position to do that, you will need to speak to your lender to arrange a new mortgage for that part of the loan.

Most lenders standard rates are quite a bit higher than bank base rate these days.