Switching to interest only mortgage

A

ArtyMarty

Registered User
Messages
8
Hi,
We have an existing mortgage but thinking of switching to interest only payments for a year or so.
Does anyone know what is involved in this. Is there any downfall of this option?
We rang our mortgage provider who is sending us out a form to fill out – but surely it couldn’t be as easy as that.
We are just over 1 year into our mortage
 
As far as I know there are only a couple of banks that will give this option. You must have a low LTV to qualify, below 50% I think ... NIB are one of the above ...
 
Salem said:
As far as I know there are only a couple of banks that will give this option. You must have a low LTV to qualify, below 50% I think ... NIB are one of the above ...
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They will consider giving you interest only for 1 or 2 year period if you are in financial difficulty.So if they refuse initially contact them and explain situation
 
IIB will give you 36 months interest only regardless of LTV AFAIK. All it takes is a call and then complete a form. Obvious disadvantages are that when you go back onto full repayments you will have relatively higher payments than before as you have less time to pay off the principal amount.
 
We are going interest only for a year with First Active. Will cost 1,000 legal fees to certify title on our house, which seems excessive considering they are in possesion of the title deeds. They first recommended some American insurance company that they use at a cost of 1,100. Then I rang my own solicitor who quoted 1,500. Then someone rings me back and says they can do it for 1,000. All seems very dubious, but the benefits of halving our mortgage for a year to give us some breathing space outways the annoying legal fee.
 
Elphaba said:
the benefits of halving our mortgage for a year to give us some breathing space outways the annoying legal fee.
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Will it really half it ? I was looking at an interest only mortgage and it only knocked about €200 per month off a €315k mortgage, is your mortgage much smaller ?
 
Thanks for that, I was messing around with it yesterday, obviously the lower the sum and term the less you pay in interest only in comparison to with interest. I had thought, wrongly, that with a monthly payment of say €1700 interest only would have knocked a good chunk off it.
My plan is too get an initial mortgage where the first few years are interest only and towards the end of those years sell the current property hopfully when conditions are better to pay off a good chunk on the new property.
 
Main problem with interest only Mortgage as far as i can see is;

1) It means the bank make more money out of you.
2) It might stop you addressing the real problems in your life which could be that you are spending more money than you have.

Make sure you use the extra money you gain for 1-2 years to sort out your financial problems in the long term or after 2 year you be in more mess.
 
Woody11 said:
Will it really half it ? I was looking at an interest only mortgage and it only knocked about €200 per month off a €315k mortgage, is your mortgage much smaller ?
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We're consilidating all our loans and borrowing 30k extra and paying off mortgage on other small property we own, which is at commercial rates, so halving would be about right. Bottom line is we need more income to address problem. Our new mortgage will be 155k with repayments down to 6 or 700 from 1,300. (First Active) Got a shock when house was recently valued at 425, for purposes of re mortgaging, valued at about 650 at the height of the boom!!! If I don't laugh I'd cry.
 
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