Can I Change from interest only to Repayment Mortgage

Is it possible to switch from a pure interest mortgage to a repayment mortgage?

Could we be compelled from a pure interest mortgage to a repayment transaction? cash F My spouse and I have a pure interest mortgage and are worried that the Act will soon change and compel us to make a repayment transaction. Accepting a redemption mortgage would more than double our cost per month. We have a home valued at around 185,000-£190,000 and we have a 155,000 pure interest mortgage on which we currently charge 2.5% interest.

First of all, no one will be compelled to switch from a pure interest mortgage to a repayment mortgage. The change in mortgage regulations (not laws) means that when granting credit to private mortgage providers, this cannot be done only on an interest rate base without first determining whether a borrower will have a reliable repayment schedule for the end of the life of the loan.

Thus, the (rather risky) policy of reliance on housing price increases to raise the necessary funds to pay off a credit is ended. This way you don't have to be worried that you will be compelled to change to a repayment transaction - but you should think about how you will pay back your present mortgage when the times come.

Unless you have 155,000 in liquid assets when the mortgage expires, you must either prolong your business or resell your home to find the necessary money and move somewhere more cheap. In order to ensure that you have fully settled your mortgage by the end of its life, your only option is to change to a repayment mortgage.

You' re right, however, that this will drive up your cost per months - in your case from around 325 per month to 695 (for a 25-year term) or even 820 (for a 20-year term). When your mortgage bank is willing to be agile - and most are if you're on a floating interest basis - you could opt for a trade-off by increasing your quarterly repayments by an amount that fits your household balance and paying out some principal each and every month.

Thats not guaranteeing that your mortgage will be payed off at the end of expression, but it does make sure that you have chopped off some of your mortgage debt. What's more, you will not be able to get a mortgage on your own. It is free of trade prejudices and is not affected by billions of dollars in ownership, politics or stock.

Mehr zum Thema