Interest Only mortgage for full 25 year term

K-Man

Registered User
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Hi All,

I took out a new interest only tracker mortgage on my apartment when we had our second child and moved to a house in 2007. The documents that I have from the bank indicate that I pay interest only for 25 years and then owe a single payment for the capital at the end of this term.

I realise that this is uncommon as I have not seen it discussed in detail on AAM, but I am keen to understand whether there are others out there who have full-term interest only mortgages.

The reason I ask is because this has recently come up in some unrelated discussions I have been having with the bank. They are currently checking into the matter, but I'm expecting them to come back and try to force me off this agreement, so I would be keen to hear whether others have successfully retained their original terms with the lender.

Thanks in advance !
 
I have come across a small number of similar mortgage agreements. I'm not sure why you expect the Bank to try and force you off the agreement. If you are complying with the terms and conditions of the loan agreement they should have no basis to change this!
 
Hi K-Man

Is your mortgage with Bank of Scotland?

Bank of Scotland did interest only full term mortgages.

They can't get you off it. You have it for the full term.

However, they want out of Ireland and may give you a discount if you switch to another lender.

Brendan
 
The mortgage is with NIB. The person I spoke with at the bank seemed very surprised that I hadn't had a review of the current agreement and that there wasn't a date planned for one. This reaction led me to believe that I have an agreement that is neither common nor preferred from the bank's perspective.

I'll see what happens anyway and highlight the outcome.
 
Check your loan agreement. This is the legal document and provided you are complying with the terms of the agreement and those terms (i.e. payment of interest only) are for the 25 year duration of the loan facility the Bank have no authority to demand any payment amendments.
 
The mortgage is with NIB. The person I spoke with at the bank seemed very surprised that I hadn't had a review of the current agreement and that there wasn't a date planned for one. This reaction led me to believe that I have an agreement that is neither common nor preferred from the bank's perspective.


It seems that they did them for 25 years for investment properties.

It looks as if they gave you the wrong contract. Well done!

If it differs from the letter of offer, they might try saying that the letter of offer has precedence. Certainly when it's the other way around. if the letter of offer was for 25 years and the loan agreement was for 5 years, I would expect them to honour the loan agreement.

Brendan
 
I know this is an old thread but I too have an interest only mortgage, it's with Bank of Scotland on my own home. I have 17 years left on it but I really don't see how I am going to have a lump at the end to pay if off. I paid €290k for my house, mortgage of €200k but my house is now worth €150k if I'm lucky! If I was to start paying the whole amount it would be over €1200 a month which I can't afford on my own. Would the bank consider reducing the mortgage or am I being naive, after 17 years do they just take back the house? Is there anywhere to go for advice?
 
I know this is an old thread but I too have an interest only mortgage, it's with Bank of Scotland on my own home. I have 17 years left on it but I really don't see how I am going to have a lump at the end to pay if off. I paid €290k for my house, mortgage of €200k but my house is now worth €150k if I'm lucky! If I was to start paying the whole amount it would be over €1200 a month which I can't afford on my own. Would the bank consider reducing the mortgage or am I being naive, after 17 years do they just take back the house? Is there anywhere to go for advice?

You might like to start a new thread in the case study section to get some advice here based on what you can, can not do/afford/etc.

If I were you I would start putting aside what you can afford to pay off the capital.

In passing, what type of mortgage protection did you take out?
Make SURE it is level term and not reducing balance.
 
Thanks Irocha, I'm trying to clear off my credit cards at the moment so my plan is from January to start putting a bit aside each month. Bank of Scotland only let you make additional payments of over €1000 a time so as soon as I have that amount I will be sending it off to them.

Yes I'll start a new thread and see what advice I get.

Thanks again
 
I too have an interest only mortgage, it's with Bank of Scotland on my own home. I have 17 years left on it but I really don't see how I am going to have a lump at the end to pay if off.

When you got the mortgage how did you intend to repay it when the term was up?

What is your interest rate?

How much are you currently paying?

How much can you afford to pay, the extra amount over your current amount?

If you still owe the mortgage when the term is up, they can seek possession of the house. Or they might come to an arrangment to extend the term. But if you are near to your 60's with not a lot of income it's highly unlikely.
 
You have 17 years left to run of IO repayments. At assumption of 2.5% annual inflation the actual current value of your loan in 17 years will be €131,500. I.e. assuming the interest is met annually this is the true value of 200K at the end of the loan term. Assuming that theproperty price index continues to rise at an average level the value of your property in 17 years should exceed the 200K loan owing.
Assuming your are on a tracker mortgage with a low interest rate you have 17 years left in this property at a verl low commiserate rent. rather than paying down the mortgage you should now start setting money aside for ultimate repayment in 17 years. get some advice on putting funds in an AVC or other pension product where your tax free lump sum can be used to cover the loan!
 
Inflation Rate in Ireland averaged 5.02 Percent from 1976 until 2014, reaching an all time high of 23.15 Percent in October of 1981 and a record low of -6.56 Percent in October of 2009
Per CSO statistics. Assumption of 2.5% over a 17 year period is conservative. The above figures includes one of the worst periods of rcession in Irish history
 
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