Is an interest only mortgage a daft idea?

[MaggieFS]

This is really just a Monday lunchtime blues pipe dream, but I'll ask anyway (and probably not get any replies hidden away on this board!).

We would like a bigger house. We love the area in which we live. Salaries are flat as pancakes. In time, I am due 25% of the value of DMs house when she dies, which is half of what was my late Dad's half, currently in trust. I wouldn't bank on half of mum's half because she will hopefully be around for many years to come and may need care fees covered.

I've always had full repayment mortgages, but I'm wondering if it's silly to get an interest only to enable us to get on NOW living the life we want to live and in time use the inheritance from my Dad against capital?

Bonkers or worth digging into?

Further back story for context: I loathe my job and want to leave, most likely towards a self employed direction. I have built up enough savings to cover a couple of years of trying to make it work, after which I would have to go back to FTE if it doesn't work. But I am conscious I would need six months pay slips/ proof of income to get a mortgage, and I don't want to wait a couple of years before moving house. We're bursting at the seams.

It can certainly work if you are financially literate and understand it. It has worked for us. We live in a large family house which would have been much more expensive to rent. As it happens we have been overpaying quite a lot, but in harsher times it has been fantastic to take the pressure off and pay the minimal interest. We have been lucky with the low interest rates, but it’s been an absolute godsend to us.

Interest only mortgages now are very different to what they were years ago
You will need a deposit of around 40% (some lenders may accept less) there's a min equity amount and a min income amount
Like someone else said they will calculate affordability on a repayment basis
And will likely (again some lenders may not) only accept sale of the property as the repayment vehicle. So it has to be feasible that you can but another property outright with the equity left after the mortgage is repaid
I'm not anti the new interest only mortgages as understand that people may want a bigger property when children are at home then downsize when they have left. But you need to accept that you either make lump sum payments and get the capital balance down or you downsize and repay it at the end of the term
I know a few people with IO mortgages who intend to repay with their pension lump sums and instead of paying a high mortgage payment on c and I they are ploughing the money into their pensions

In general I don’t think they’re a good idea. I can’t speak for all banks but the one I work for has a requirement of a £100k salary or £100k savings in order to qualify for an interest only mortgage on a long term basis.

If you like the idea of up-sizing without too much cost and then downsizing at a later date, a second option to interest only is to significantly increase the term.

For example, of you've got 10 years left on your mortgage and intend to finish the mortgage my then. You could borrow more and max the term to 30y (or retirement age). That decreases the monthly payment.

Then, as long as you know that you're only living there for 10y, downsize and pay off what's left on the mortgage after 10 years.