Interest only on mortgage

It does exactly what is says on the tin. You just pay the interest for a year then after the year it will revert to capital and interst repayments. Which lender are you with? How much is mortgage outstanding, what interest rate are you paying?
 
Im with acc, my mortgage is 1114 monthly at a fixed rate of 5.2% (rough percentage). Can you tell me how much my monthly repayments would be if I was approved interest only?
 
NorfBank said:
How much is mortgage outstanding, what interest rate are you paying?
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The current payments aren't that relevant, the important details are the current amount still owed and the rate (exactly if possible).

With interest only you won't be touching the amount owed, just paying off the interest it gathers over the year (you'll owe the same amount at the end of the year as you do when you begin the interest only payments). It'll cost more over the life of the mortgage, but with more expensive debts to service (presumed from post on another thread) should allow you to reduce monthly outgoings and possibly save over the life of all debts (while also allowing for less stress etc.).
 
I would say 185000 - 190000 is still owed and at the rate of 5.2/5.4%. Im looking into confirming those details as we speak.
 
When you get the full details (NorfBank gave you the worst case with the highest of both variables)... you can get a closer estimate using...

(Amount Outstanding * Rate (% so convert to decimal [5.4% = 0.054]) )/12 = Int Only payment per month [possibly some slight change depending on Ts&Cs of the mortgage and potential additional costs (admin fee for change??? etc.)]
 
My bank has just give me figures, settlement for mortgage as off today is - €190,200/ 190,300. Interest Im paying is 5.25%. Think I should be paying 757 monthly for 12 months if I choose this option.
 
€190300 (190200) @ 5.25% = €833 (~€832).. both rounded slightly.

As mentioned, check if any additional fees may be charged for changing.
 
Okay, they had quoted 829 but I thought she said to take €72 tax relief off that. Anyway, do you think this is my best option to lower the price of my montlhy mortgage? Its crippling me at the moment.
 
If you have unduly high outgoings this year then an interest only mortgage may be a way to stop you getting into arrears. But if you are struggling to repay (mindful of your other posts re high personal debt) then you should think of a different avenue to keep your finances in order.
 
Agreed, it may take the pressure off for a year (if ACC agree to it) but once it's over you may find yourself really struggling with the higher repayments unless you take the year to completely reshape your finances, be vigilant and stop spending on what are not essential items.
 
uptomyears said:
Anyway, do you think this is my best option to lower the price of my montlhy mortgage?
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You have a few options of lowering the amount of your monthly payments.

Interest Only - will reduce monthly payments the most, but will cost you the most over the life of the mortgage (not a real issue given current debt problems so probably your best bet)

Reduced Rate - would lead to a slight reduction in payments. (5.25% seems very high, even for your fixed term). Given you just fixed could be very large penalty attached to changing so probably not worth it.

You really need to consider the rest of your financial situation. Going to IO will reduce the mortgage payments, but your outstanding balance is still there. Read up on the similiar advice given in other threads for tackling debt problems to see other possible options (MABS, sell property to regain equilibrium [and save on debt interest - also possible huge savings on stress], RentARoomScheme [increased income to help with mortgage payments], look at tax situation [are all benefits/credits/etc being claimed], etc. etc.).

Going IO is a short term solution to help the situation, you need to be able to draw up a long term plan to see the light at the end.
 
And as unsavory as it may be, your final option is to sell.
 
lina said:
Hi,

it's fixed to ending time or only fixed it early in the year.otherwise we will get a problem at ending time.
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What? :confused:

"Ending time"? Ending of what, the fixed rate period or the term of the loan?

" it's fixed to ending time or only fixed it early in the year"... Is this a statement or a question? The rate is fixed for five years, it was fixed earlier this year. Any changes could/will come with penalties/costs to alter a fixed period. The OP will have to check out the full details from the Ts&Cs or direct from the lender.

"otherwise we will get a problem at ending time."....
"Otherwise".... other than what?
"we".... do you mean the OP?
"problem".... such as costs/fees/penalties?
 
Im confused, so basically you are all advising that interest only will only see me through for a year but in the end my payments will be higher. I havent a notion of clearing my other loans in one year, Im working around the clock 5-7 days a week, I am struggling to get tenants,

doesnt sound good does it, but your advise to sell? I couldnt, unless I was to sell and repay all my debts from the sale of the house.

Which brings me to another query - if I was to sell, i.e, house cost 190,000 and word of mouth now says the house is worth 280,000, would that mean that I keep the balance of 90,000 or do I have to still pay interest?
 
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