on an interest only mortgage

[wedrum]

what are the options nowadays to go about paying the interest only mortgage ?
we only have 10 years left on the mortgage, so time to knuckle down now and get it paid off.

the father in law mentioned an endowment but i have no idea ?

 

[Rroff]

I have no idea but aren't endowment policies supposed to be taken out at the same time as the interest only mortgage? not sure 10 years will cover that.

 

[VincentHanna]

Wish I had taken out an interest only mortage 10 years ago to get on the ladder.

The Property would have been worth 2x what it was then!

 

[booyaka]

Look at it from the other side - when the 10 years are up - how you going to pay it off?

You need to seriously consider how your going to clear it - best way (but will be expensive) will be to overpay and effectively turn it into a proper Capital and Interest Mortgage. But that might not be affordable to you - all depends.

But you should have really considered how your going to repay it when you took it out - not 10/15 years down the line!!!

 

[[FnG]magnolia]

what are the options nowadays to go about paying the interest only mortgage ?
we only have 10 years left on the mortgage, so time to knuckle down now and get it paid off.

the father in law mentioned an endowment but i have no idea ?

Isn't this the bit in the film where you speak to your Bank, Accountant, or FA?

 

[wedrum]

mortgage is with C&G and after an hour on the phone yesterday we got nowhere with them.

the mortgage is 115k.
house is worth around 125k now.

hoping to get about 60k saved from now until the 10 years are up then either get another mortgage for the remainder or use the money we have in the house then and maybe move.

 

[Psycho Sonny]

mortgage is with C&G and after an hour on the phone yesterday we got nowhere with them.

the mortgage is 115k.
house is worth around 125k now.

hoping to get about 60k saved from now until the 10 years are up then either get another mortgage for the remainder or use the money we have in the house then and maybe move.

why don't you just re-mortgage now with a decent company like nationwide? for say 15 years?

 

[meths]

I don't know your exact circumstances but I wouldn't try to save your 60k separately from your mortgage account.

You will likely spend some of it and if you pay it into your mortgage as you have it then each payment will lower the interest added on each month.

 

[wedrum]

why don't you just re-mortgage now with a decent company like nationwide? for say 15 years?

been a bit silly over the last 10yrs and racked up a bit of debt which is being paid but struggling to get a good deal on one.

 

[Hambut_Bulge]

I have no idea but aren't endowment policies supposed to be taken out at the same time as the interest only mortgage? not sure 10 years will cover that.

Yes, endowment policies were popular in the 1980's. You had two agreements: one with the lender as an interest-only basis; the other with an insurer for the term of the mortgage. When the endowment policy matured it should, in theory, have grown enough to cover repayment of the captial. Of course what really happened was that as the UK transistioned to a low-inflation economy the earlier projected growth rates turned out to be wide of the mark and people were having to make up the shortfall.

Wedrum, with an interest-only mortgage you really out to have been putting money into your chosen repayment vehicle from day one (and tbh, most lenders these days want to see evidence of this). With only 10 years left, you're going to having start saving hard. Alternatively, if you think you really can't make it in time, consider switching all or part of it to a repayment mortgage.

Best advice, speak to your mortgage lender now.

 

[VincentHanna]

been a bit silly over the last 10yrs and racked up a bit of debt which is being paid but struggling to get a good deal on one.

Sounds like half the country....

 

[Psycho Sonny]

been a bit silly over the last 10yrs and racked up a bit of debt which is being paid but struggling to get a good deal on one.

so not only do you have an interest only mortgage to pay off in 10 years you also have lots of debt to pay off now?

yeah good luck with that. maybe you should bite the bullet and take whatever deal you are offered even if it's not that great. because at least it's better than what your doing at the moment.

 

[Royal Fleet]

If you have other debt you are unlikely to be able to save at a rate of return which would be greater than the rate you are paying on your debt. Therefore a logical solution would be to accelerate paying off your unsecured debt before starting on your secured.

Best plan would be clear unsecured debt then payoff chunks of the mortgage. This would reduce your LTV and hopefully in the same period your credit rating will improve. Then in 10 years (or before) you can remortgage onto a repayment mortgage.

This however would require a financial discipline which your comments so far would indicate may not be there at present.

 

[dowie]

been a bit silly over the last 10yrs and racked up a bit of debt which is being paid but struggling to get a good deal on one.

So remortgage in a few years when you've sorted your debt issue out... I mean if you can't sort out your debt fairly soon then you're not going to be paying off your mortgage either. No point repaying or overpaying this mortgage until you've cleared your debt anyway as it likely carries a higher interest rate.

 

[dowie]

Yes, endowment policies were popular in the 1980's. You had two agreements: one with the lender as an interest-only basis; the other with an insurer for the term of the mortgage. When the endowment policy matured it should, in theory, have grown enough to cover repayment of the captial. Of course what really happened was that as the UK transistioned to a low-inflation economy the earlier projected growth rates turned out to be wide of the mark and people were having to make up the shortfall.

Depends when they were taken out - my parents made a profit on their endowment policy. The general public doesn't like taking losses on financial products and endowments certainly burned some people thus are no longer typically offered. We don't tend to get long term fixed rate deals either for example - the public would be super ****** if lots of people had say fixed at say 4 or 5% a several years back and were still locked into the deal over the last few years.

 

[edscdk]

mortgage is with C&G and after an hour on the phone yesterday we got nowhere with them.

the mortgage is 115k.
house is worth around 125k now.

hoping to get about 60k saved from now until the 10 years are up then either get another mortgage for the remainder or use the money we have in the house then and maybe move.

you spent 10 years paying interest only!!

best bet, invent a time machine, go back 10 years, overpay... PROFIT!

you want to save money in a savings account then pay of your mortgage in 10 years with it??

you know its cheaper to pay of the mortgage as you go? if you have a savings account that pays more then the mortgage costs id be amazed

 

[Syla5]

Quite simply your most sensible option right now is to overpay until you have a LTV% that opens you up to better and lower rates and then remortgage on to a better lower rate as capital repayment mortgage and continue to overpay then.

Without information such as how much can you afford to pay per month, how much is your current payment, whats your interest rate, and whats your other debt commitments its really hard to give clear advice.

If you do have other debt however you need to focus on clearing the debt based on highest interest rate first. So if you have a credit card and or loan as well as your mortgage they will most certainly be higher rates. Pay them off first and fast then commit more to your mortgage.

 

[wedrum]

ok so first things first contact all our debts and get some ppi claims in
then pay off all debts and remortgage.

 

[booyaka]

you need to serious sit down and think about your finances.

£115k over 10 years on a repayment basis is around £1100 a month (generalising at 4% fixed rate)

Remortgaging and stretching the term longer is not ideal as your paying even MORE interest on the mortgage. Guessing that the original mortgage was 25 years so you've probably paid in excess of £50/60k in interest already.

As above - sit down, work out a sensible way of clearing any debts usually the largest % APR first.

Don't bury your head in the sand any longer - get it sorted asap!

 

[booyaka]

ok so first things first contact all our debts and get some ppi claims in
then pay off all debts and remortgage.

oh dear - relying on PPI claims ain't the way forward!!!