Anyone ever changed to an INTEREST ONLY mortgage?

[shoobaloo]

DH and I agree that DS who it 18mths would greatly benefit from going to nursery two mornings a week. In order to finance this, we would probably have to change our mortgage to interest only for a couple of years. Has anyone ever done this? Was it scary - esp as you don't know what the interst rate will be when you go back to paying the mortgage off properly in two years time.

Haven't had time to read every post but when we had to make this decision,I thought of my parents who bought a house for £35,000 in 1982. This was a lot of money for them then. The mortgage rate then went up to 15% and almost crippled my parents, who went to interest only to try to survive. Now, of course, the mortgage is about to end and could practically be paid for on a credit card!

It is risky but you still have the house to sell if you get into difficulty, and if it means the difference between surviving and going under, def go for interest only.

We currently have an interest only mortgage because we had no choice. We wanted to move, both work full time and pay £400 per month in childcare costs. We did move - we have a good chunk of equity in the property and as soon as dd goes to school (next Easter), we will be changing to a repayment-type-thing! We have life cover too. It's not what I would chose to do but we are thinking long term.

i agree satine

We have a facility of having a payment holiday of up to a year on my mtg, and I considered getting this when I was still on mat leave with dd1. I am glad I never did this as, even though it was a struggle, we paid £7700 on our mtg that year.

You really have to weigh up the pros and cons of flexibility

Just a personal opinion, but I don't believe the Bank of England would raise interest rates to those levels again. Don't forget that the new Labour gov't back in 97 was to give the BOE complete control of interest rate decisions - something they hadn't had before.

The BOE have no wish to see negative equity happening again and though they will cautiously raise rates to try to cap inflation, they are after all a financial business and such an economic situation would harm them too.

Plus, EU rates are lower than ours, so it's a possibility in the future that if the UK comes closer to EU monetary policy, that our rates will become more in line with those in the EU.