Interest only mortgage - how likely is it?

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Imhotep

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Post by Imhotep » Thu Aug 19, 2010 12:09 am
Hi.

How likely is it that our creditors could ask us to change our repayment mortgage to an interest only one once our IVA has been submitted?

I mean, is it quite common? I'm just worried because I don't know how it would affect my mortgage insurance. Would I have to get a new life insurance policy? I've been told I'm uninsurable due to having leukaemia. Our current (death only) insurance policy was taken out prior to my diagnosis.

And if it did have to be changed to interest only does that mean we have to get out an endowment policy as well? Or is it a case of "tough, you'll never be able to pay your house off"? [:0]
Last edited by Imhotep on Thu Aug 19, 2010 12:11 am, edited 1 time in total.
 
 

MelanieGiles

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Post by MelanieGiles » Thu Aug 19, 2010 12:32 am
It is not really common to be honest at the bequest of creditors, but sometimes people will do this of their own volition to release more disposable income. This should not affect insurance policies, but if there is any doubt check with your own provider.

Whether you take the view that an interest only mortgage is tough, probably depends on how high up your priorities your debt repayments are.
Regards, Melanie Giles, Insolvency Practitioner
 
 

Imhotep

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Post by Imhotep » Thu Aug 19, 2010 12:39 am
Thanks Melanie.

Debt repayments are high on my list of priorities, but keeping a roof over our heads is higher.
 
 

MelanieGiles

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Post by MelanieGiles » Thu Aug 19, 2010 12:47 am
It is important to remember than then, if your IP or creditors start pushing for more money - and do remember that with a repayment mortgage, you may be creating equity over the five year term, leaving yourself possibly open to taking out a larger mortgage to deal with equity release in the final year.
Regards, Melanie Giles, Insolvency Practitioner
 
 

karen

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Post by karen » Thu Aug 19, 2010 8:15 am
I'm afraid that Northen Rock would only accept our IVA if we released extra funds by going on an interest only mortgage. We didnt have to take an endowment or anything but when the IVa is finished we will have to pay as much extra into the mortgage as we can to try and catch up. I must admit I cant see us ever paying off our mortgage
we were late in life taking out a mortgage and there is still as much owing now as when we started 7 years ago,I'm not even thinking about it who know's what will happen in the next few years. We will decide what to do when the IVA is finished.
Karen
 
 

Shining

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Post by Shining » Thu Aug 19, 2010 8:37 am
I'm about the same as Karen, not sure what we'll do either as we're interest only but I'll deal with it one step at a time and for now to complete my IVA is my priority and then I might just sell the house and hopefully come out even and move into rented x
IVA final payment left the bank on the 26th January 2013...looking forward to a debt free future.
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