Interest only - what are your views?

[NKF]

Is it a total disaster (unless you expect to inherit sufficient to pay off loan)? I know many people who've done it and while I admire their courage (and often the places they get to buy), I'm not sure.

There may not be much differnece monthly but at the end with a repayment the house is yours whereas with IO the initial house price is still to be paid

There is a big difference monthly. That's why people do it.

yes and that scares me noddy
what if you dont have enough to pay it??
as has happened with thousands of people

Sorry, that sounded more certain than I felt. But that's always been my understanding.

nkf
but you have to include the insurance/policy/whatever you have to have to pay off the loan at the end of the term!!!
so if you include THAT the difference is not much

endowment is the word i ws looking for

But people have IO without the repayment vehicle don't they? They're banking on capital growth. It's like an endowment mortgage (remember them?) without the endowment.

Banks and bs used to make you have a repayment vehicle for the balance but they don't now so even riskier.Your monthly payments jump up a lot quicker when rates rise aswell.

but annie realistically you need one

unless you are very very brave or stupid

?

We don't have an endowment or similar as it's not necessary at the momene. We intend to pay it off well before the 25 years is up.

oh i see

oh i hate mortgages

i totally see others POV

and the reasons why

can i recommend the alliance and leicester incase anyone is looking for a lender - we have moved house lots of times - about 5 times in ten years - each time we have had a fixed rate mortgage on a 5 yr minimum -
example
we are moving again next month ad we have only had 2 years out of the required minimum of 5 on a fixed rate of 4.5%

instead of applying the fine that we should be paying (as we are increasing the mortgage next month) the A&L have agreed to increas the mortgage but keep it on the fixed rate of 4.5% for the rest of the term (3 years) they are also paying additions such as a £520 survey

and the process only took a 5 minute phone call with an extremely friendly Geordie

I can see why people might consider it as a very short-term move, but I would never do it.

I don't agree with the argument that in 20 years the mortgage value will seem so much less - we took out our first mortgage nearly 17 years ago, and while that amount is obviously 'less' now in the sense that house prices have risen and so have wages, it is still not an insignificant sum.

Looking back at our first mortgage, we could not afford now just to pay that off, no matter that inflation might have eroded the value of the original figure.

I do know people who are planning to pay off the mortgage by downsizing, but I still think that is a gamble. We might downsize when the children have left home, but to us that will be to give us a choice as to when we retire, where we live, what we do etc. Not a necessity because of a mortgage that needs paying off.

And I'm just to stingy to part with loads of interest over those 20+ years, it's really satisfying to see both the mortgage amount and the interest paid going down each year.

We have one, because our capital is tied up in other houses that it doesn't make sense to sell at the mo (one being the house MIL and step-FIL live in, they might have a bit of an objection!). I wouldn't want to use one without a definite plan in place as to the end game. You could gamble on house prices rising up til the day you needed to pay off the mortgage and then crashing the next day so you could afford to buy somewhere on the profit from the sale?

AM - why are you stuck with a redemption penalty? Are you remortgaging early?

I think we've been in that position. We had to weigh up the difference between the drop in monthly outgoings and the repayment figure. I remmeber in our case it was better to stay till the end of the fixed term.