Im currently on interest only mortgage with what used to be Northern Rock and is now Landmark Mortgages. My Iva ended March this year after 6 years and my Completion certificate arrived in May. My question is..... If I stay with Landmark and just swap from interest only to Repayment, will they still need to do a full credit search? Ive checked my file and all is clean on all 3 credit files. Im not borrowing any more money so just changing the way its paid. I know my payments will go up but I can afford the new payment because im no longer in IVA?
Im not really looking for a new deal though. Im happy to stay with Landmark because interest rate is quite good. Im just wondering if its fairly simple to swap it from interest only to repayment. I know that all lenders are desperate for people to swap onto Repayment because of the problems with interest only
I would be careful about actually switching to full repayment as it would be impossible to ever switch back. It may be better to calculate how much the repayment would be and make voluntary overpayments of that amount which would equate to the same thing. At least then if something does change or you have a bad month you can revert to the interest only amount without being in arrears or incurring any penalties.
Not quite sure how it would all work? Basically, I took out the mortgage in 2005 and was always meaning to switch over to repayment after a couple of years once my loans were paid off. But everything escalated and 5 years later I went into an IVA. My mortgage payment is 500 and my IVA payment was 500 so for last 6 years ive been living quite comfortably with 1000 per month going out. If i switch to repayment, Landmark say the mortgage payment will be 1020 per month using my existing term so I will be mortgage free in 14 years. I would rather take out a new mortgage elsewhere over 25 yrs and pay overpayments each month but not be bound by the overpayments so if I needed the money for other things for a couple of months then Im free to do so.
Ive got a telephone mortgage application booked in with First direct next week. Ive been honest and explained about the IVA and they have said as long as im not in it at the moment then it should be fine so i'll keep people posted on that one next week. But if the mortgage is declined then im going to be looking at just staying with Landmark and swapping over to Repayment but could do with finding out if they do a credit check when just swapping over from interest only to repayment
Also if I stay on interest only at 500 per month and pay 520 per month overpayments. I will have only paid 83000 off after 14 yrs when i still actually owe 138000???
It seems like your current rate is around the 4.3% mark and there could be better rates out there. It is certainly worth looking but be careful about having too many searches recorded against you as this could adversely affect your file too.
I am not sure how many interest only products there are available to new borrowers so again make sure this is what is agreed before you sign up.
I repayment mortgage at 4.35% over 14 years would cost about £1100 per month so if you got a cheaper deal you could either reduce the term or the monthly payment. It might be worth having a word with a broker like Shaun Vickery who posts here to see what is available and at what rate.
Thanks Michael for the advice. Ive spoken to Landmark mortgages again and the penny has finally dropped. They basically said I should stay on Interest only and if i can afford to do so then pay 600 per month overpayment. They explained that although now it would be 1100 per month made up of 500 interest and 600 overpayment, in the years to come, the interest will reduce over time and if i keep paying the 1100 per month then eventually i will be paying maybe 100 interest and 1000 overpayment so i fully understand it now. Also by staying interest only i can miss a few months overpayment if i need to
Im still going to go ahead with my First Direct mortgage application next week. If its declined then my plan b of making overpayment will start. I know it will put a mark on my credit file but im not wanting any other credit in the not too distant future
