Interest Only Mortgage

[Scarlettpixie]

Has anyone got an interest only mortgage? Was it easy to arrange?

I live in a 4 bed house with a mortgage of around £500 per month. My son is at university, living away from home/home in the holidays/some weekends.

I have a car loan of £200 per month and about £3000 on credit cards (on 0%). I give my son £200 per month for groceries while at uni (less over the summer when he will be home and I will be buying more food).

I have literally no money left at the end of the month. It's tight. I have been spending my savings to top up when I need to make a purchase and now that has reduced to the lowest level I am comfortable with. What is left, I really don't want to touch as it is for emergencies. Basically, it would be enough to pay off my credit card and car loan leaving me with zero. It is my safety net.

I planned to downsize when my son started uni but I love living here and keep putting it off. The more I think about it, the more I wish I could stay until DS has finished uni and is set up in his own home. Obviously if he comes back here to live and work for a while, he will pay board which will help with the monthly expenses until he is ready to move out.

I am wondering about taking on an interest only mortgage of around £100K which will give me enough money to do some jobs around the house (new bathroom/kitchen) and pay off the existing mortgage/debts. I have priced this up and would be around £500 a month better off.

I earn £45k per year and am single. I see many lenders won't allow an interest only mortgage unless the annual household income is significantly higher, although on paper I appear to meet the criteria with 1 lender.

My house is currently worth £450K so within the next 5-10 years, my plan would be to downsize to a house worth £300K - £350K and pay off the mortgage in full. The work I plan to do should add value, at least to the value of the work and would make the house more appealing when I do come to sell.

Has anyone done similar? Can you suggest any lenders? Any thoughts welcome.

Oh ffs @BudgetBuster. I don't want more disposable income so I can spend more than I can afford. I want it so that I can continue to afford to live here and save up for things.

I appreciate all the advice I really do but you don't know me.

But you already spend more than you can afford. The housing expenses (mortgage, insurances etc) weren't your downfall. Your ridiculous idea that you can go in 3 holidays a year, pay for someone else's pet, buy groceries for a family of 5.... those are the luxuries you should be sorting. Not getting more disposable income so you can comfortably overspend on those items.

Just a little update.

I have paid off my car loan from savings 🙂

Do you have a employer pension? Does it include life insurance / survivor's benefit??

Yes and yes.

So then why are you paying for 2 more lots of life insurance per month??

The main one is life and critical illness and anyway isn’t enough to cover the mortgage in full. The critical illness part is why I want to keep it otherwise I would stop that one. Obviously death in service only gets paid if I die before I retire. i probably don’t need the life insurance anymore but it’s only £8 per month and will apply after I retire if I happen to retire early for any reason.

And if you're about to borrow more, does your total life insurance cover everything? Although if you've still got a lot of equity then it probably doesn't matter.

Yes the additional life insurance means that the mortgage is more than covered. I initially took it out so that in the event of my death, my late mum would receive back the sum she had put into the house when she came to live with us (left to her in my will), and my now ex husband could still afford to keep the house and the mortgage would be paid off.

i would just downsize now rather than wait 12 months or so.