Be Warned..Interest only Mortgages or extending an interest only mortgages!!

I always believed that if an interest only mortgage was taken out with a 25 year (interest only) term that meant that in 25 years you would have to "start" paying off the capital. I didn't realise that you would be liable for the whole amount immediately the term ends.

Huh? And over how long did you expect to have to pay off the capital, after the 25 year period?

Brendan
 
Well good question Brendan... that's where the naive bit comes in. I guess when I took out these mortgages, 25 years was so far down the line I hadn't considered an exit strategy. Still I do believe regarding extending an interest only mortgage some of what I have written may be useful to others, even if my post potentially makes me look stupid!!
 
I guess I have never fully understood the consequences of an interest only mortgage.

I always believed that if an interest only mortgage was taken out with a 25 year (interest only) term that meant that in 25 years you would have to "start" paying off the capital. I didn't realise that you would be liable for the whole amount immediately the term ends. .

I was so shocked at this that I decided to go back and read your previous posts, as I had remembered you on other threads.

You are experienced, about 9 years at this business, have several properties, no mortgage protection, despite having a partner and children, you have good trackers, and good rental. You've discussed property on many posts, you're a frequent poster.


Please tell me you at least have now purchased life insurance. That you are using up all your rental income to pay down capital, or at the very least are putting it into a high secure interest rate account, (you guys know what I mean) for the day the capital s due.

I also advice you to post on here all your mortgages, terms, and interest rates, and if you don't do that, please go and see a professional to assess your financial situation.

Thank you though for your honesty. I hope there are not many others that acquired interest only mortgages that don't understand how they work.

Never been a fan of them myself, but it was all the rage in that key bubble
 
Deleted as I didn't consider I was providing worthwhile advice to anyone.

That's an awful pity you deleted this, it would have been very helpful for others out there who don't understand IO mortgages and who are reading this.
 
That's an awful pity you deleted this, it would have been very helpful for others out there who don't understand IO mortgages and who are reading this.
+1

You're not alone as per my post here.

There are probably quite a few people out there who purchased BTL's with shorter IO periods than you, not realising what is looming around the corner.

According to Olive Moran, Bank of Ireland Mortgages Manager, "some 75% of Bank of Ireland investment customers have availed of the bank’s ten-year interest-only mortgage". BOI has €7bn worth of BTL mortgages. These were being pushed by BOI from 2004 to 2008, so the IO period is expiring from this year to 2018.

Charlie Weston did write about it in the Indo in 2012 and it would be good to see a more detailed piece warning those who don't realise that the IO period is coming to an end, that the mortgage will move to P&I with high repayments and where to get advice about dealing with the banks.
 
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