Hi guys
Yesterdays news concerning the interest-only time bomb has probably scared a lot of people.
I wanted to get peoples opinion on my situation, as I have yet to convince myself to jump on the repayment mortgage with my current lender.
Im 29, earn £35k. 6 years ago, I took out an interest-only mortgage. £146k loan, 85% LTV, 25 years. Fixed 2 years, currently on Banks SVR.
For the first 5 years, I did not pay off a single penny towards the capital.
My interest element of the mortgage is currently £320. For the past 1 year, I have instructed my bank to take out a fixed payment of £750 from me (interest and capital). So effectively I have been paying of £430 capital a month on average.
However for the past 2 years I have received a generic letter from my Bank saying that I am on interest-only, and periodically they may ask for a repayment vehicle.
I obviously do not have a vehicle in place, as they do not see a Cash-Isa as a repayment vehicle.
When I spoke to my bank 2 weeks ago, they said I can go on repayment, and stay on the same terms (i.e. same SVR). I can even extend the term up to 40 years, but I dont want to pay more interest, as I have only 19 years left.
I am happy to go on repayment mortgage now, as that will make my mortgage £800 a month, which is only £50 more than Im paying right now. And avoid the headache of finding a repayment vehicle.
However I am worried about future BOE interest rate rises, my mortgage can potentially go up to £1000.
In April 2014 new regulations will come in place. Will banks force their existing customers to go on repayment? Will they force customers on to new terms, with potentially higher rates?
Do I go on repayment now, or carry on making the current payments and keep my niche product and have control of my outgoings.
Thanks for your responses and advises. :o
Yesterdays news concerning the interest-only time bomb has probably scared a lot of people.
I wanted to get peoples opinion on my situation, as I have yet to convince myself to jump on the repayment mortgage with my current lender.
Im 29, earn £35k. 6 years ago, I took out an interest-only mortgage. £146k loan, 85% LTV, 25 years. Fixed 2 years, currently on Banks SVR.
For the first 5 years, I did not pay off a single penny towards the capital.
My interest element of the mortgage is currently £320. For the past 1 year, I have instructed my bank to take out a fixed payment of £750 from me (interest and capital). So effectively I have been paying of £430 capital a month on average.
However for the past 2 years I have received a generic letter from my Bank saying that I am on interest-only, and periodically they may ask for a repayment vehicle.
I obviously do not have a vehicle in place, as they do not see a Cash-Isa as a repayment vehicle.
When I spoke to my bank 2 weeks ago, they said I can go on repayment, and stay on the same terms (i.e. same SVR). I can even extend the term up to 40 years, but I dont want to pay more interest, as I have only 19 years left.
I am happy to go on repayment mortgage now, as that will make my mortgage £800 a month, which is only £50 more than Im paying right now. And avoid the headache of finding a repayment vehicle.
However I am worried about future BOE interest rate rises, my mortgage can potentially go up to £1000.
In April 2014 new regulations will come in place. Will banks force their existing customers to go on repayment? Will they force customers on to new terms, with potentially higher rates?
Do I go on repayment now, or carry on making the current payments and keep my niche product and have control of my outgoings.
Thanks for your responses and advises. :o