I have a €200,000 23 year term mortgage which is interest only for the first 5 years. I understand that I will then have to repay the interest & principal over 18 years.
Is there a difference in what I have to repay overall ?
I have a €200,000 23 year term mortgage which is interest only for the first 5 years. I understand that I will then have to repay the interest & principal over 18 years.
Is there a difference in what I have to repay overall ?
Interest only should be used when you are struggling to meet the repayments (more a short term solution to cashflow problems). 5 years is a long time for a bank to offer Interest only, are you sure it wasnt a five year fixed interest mortgage?
Assuming you are correct, the sooner you can afford to, you should consider going capital + interest (subject to consideration of other factors - Interest rates etc).
With interest only you will owe €200k until you start paying capital. If you leave it the 5 years in essence it will of been like you paid the banks Interest of x over 5 years (think of it like a premium for you to have the money) and will of paid nothing off your house. technically your real mortgage repayments will only begin when you goto Capital + Interest.