Ask the experts
About our experts...
At John Charcol, we are constantly asked for advice by borrowers on what they should do when it comes to mortgages. As such, we created this section so that you can submit your questions to our experts. The answers are provided by a number of people who have years of experience in the mortgage market. The team is led by Peter Woodward who spent his formative years as an underwriter with one of the major UK lenders and the last 10 years in our Technical Department along side Ray.
So please do submit your question and we will do all we can to answer it as quickly as possible
Please be aware that these answers can only be generic and no personal recommendations can be made.
Posted on 27/03/2010
I borrowed £25000 on a 10 year interest only mortgage with Egg to buy under the rtb paying a deposit of £30000, the property was dicounted to £55000. I'm 65 in October & due to repay £25000 by then. I'm wondering how to do this and my options the property value is around £145000 now the mortgagor told me they wouldn't extend the term beyond my 65th birthday so I'm assuming I will have to sell, and buy something else I'm not working due to ill health and get pension credit who, atm are paying the interest for me, I have just under £10000 in savings.
Categories: Interest only vs repayment, Mortgages in retirement
Posted on 03/04/2009
I have equity of 130000 in a property valued at 150000. I want to buy a second property to retire to in 3 years when I will be 60. In the meantime I would like to rent out this second property.
I have an income of £48000 and will have a final salary pension of £20000 + 60000 lump sum when I retire.
Should I buy the second property on an interest only mortgage to keep repayments down and settle the balance when I sell my existing property or is there another way?
Thank you.
Barbara,
Your suggested way of structuring this is eminently sensible. The maximum you can currently borrow on a Buy to Let (BTL) mortgage is 75% of property value but you will get a much better rate if you but down a bigger deposit and you will then also have a much wider choice of lender.
Therefore, unless you have enough savings for the deposit it will probably make sense to borrow some of the funds required on your existing residential property, also on an interest only basis. You will also be able to borrow at a cheaper rate this way.
You will still be eligible for tax relief on the interest providing you can show that the additional borrowing on your residential property is used to buy the new property. The best way to do this is to make sure the funds stay with your solicitor, who can then use them as part of amount sent to the vendor’s solicitor.
If you would like more specific advice, including tailoring how much to borrow on each property, please call us on 0800 71 81 91.
Categories: Buy-to-let, Interest only vs repayment, Legal matters, Remortgaging, Tax issues
Posted on 27/02/2008
My house is valued at around £400,000 and I currently have a mortgage balance of £137,000 owing and a term of 8 years. I'm currently earning £65,000 - £70,000 (salary+pension) per year & paying approx £20,000 in tax. I'm allowed to put £21,000 into AVC'S. Should I change to an interest only mortgage and let the AVC fund pay off the mortgage? I'm 58 years old.
Categories: Interest only vs repayment
Posted on 06/02/2008
I have an interest only mortgage with Northern Rock of £180,000. I am 61 years old. I need to change the mortgage to a repayment but will the repayments be too high? Should I transfer to another lender? Also I want to buy a property probably in Spain. Liz
Categories: Interest only vs repayment
Posted on 28/01/2008
We have an interest only mortgage of £25000 with 18 months left of our 25 year term. We also have a repayment mortgage on the same property with £8489.00 owing over 4 years. Our endowment policy will not meet the £25,000 target for the interest only loan. We have £10,000 available to either clear the repayment loan or to use in reducing the capital on our interest only loan. We'd be grateful if you could advise us which is the best option. Are there other ideas we might pursue?
Categories: Interest only vs repayment, Mortgages in retirement
Posted on 28/01/2008
If I took out a interest only mortgage say of £142,000 over 22 years and was allowed to pay an extra 10% a year if I paid the extra each month as if it was a repayment mortgage and never missed a payment would the extra money come off as if were a repayment mortgage or would the bank work it out differently.
Categories: Interest only vs repayment
Posted on 07/11/2007
We have a joint mortgage on a 10 year term, £80,000 interest only & £53,000 on repayment total £133,000. The house is currently valued at £300,000. Our current tracker ends in Jan 2008 so we are looking to remortgage now. In July 2010 I retire & will get a lump sum of £120,000 which I intend to use to clear as much of the mortgage as possible. I need the best 2 year deal I can get. Would you advise keeping the split the same as now or upping the interest only to £100,000 and trying to overpay on the £33,000 repayment portion?
Categories: Interest only vs repayment, Overpayments, Payment Holdays, underpayments, Borrowback, Remortgaging
Posted on 16/10/2007
I have just found out from my widowed mother in law that she is still paying for a mortgage on her house and she's 76. It appears my father in law took out a mortgage called a life time mortgage with the Halifax and no life insurance, I'm not sure if life insurance is applicable because it is a lifetime mortgage and i know my father in law did not have life insurance. Reading through the paperwork my mother in law is paying interest only on a balance of £16000. I believe that once she dies the Halifax get the house
If this is true, could my husband and i pay the £16000 off as my mother in law doesn't really understand and insists the house has been left to my husband?
Categories: Interest only vs repayment
Posted on 04/10/2007
I have a Interest only mortgage for £128,449 but looking to covert that into a repayment mortgage, as I want to start killing off the mortgage instead of just renting out the Money. What options can you offer me?
Categories: Interest only vs repayment
Posted on 10/09/2007
What is the cheapest way of me getting a mortgage of £120k so that my payments are as low as possible for the first 12 months?
Categories: Interest only vs repayment, Lower mortgage payments, Remortgaging
Posted on 07/09/2007
I am trying to get a mortgage to buy out my husband as we have now separated. At present I earn £45,828 as a headteacher. Our house has been valued at £375,000. We have an interest only mortgage of 120,000 and I would...
Categories: Interest only vs repayment, Lower mortgage payments, Mortgages in retirement, Remortgaging, Valuations, Freehold, leases & unusual property
Posted on 06/09/2007
I am trying to find a mortgage calculator to provide guidence to establish the cost at variance interest rates on a part interest, part repayment format - Can you help?
Categories: Interest only vs repayment, Lower mortgage payments
Posted on 01/09/2007
I have a 38k mortgage with 12k on capital and interest and the remaining 26k on interest only. It still has 7 years to run. As I'm 2/3rds through a fixed 3 year term I've been overpaying £500 a month with the aim of paying it off asap.Ive now reached the 25.7k point and my online statement says it is now interest only. Is it worth still overpaying? Will I still be paying off capital? Why have my monthly payments ceased to drop? Would I now be better off filling up an ISA? Would selling my endowment (not surrender) be an option to consider once back on a fixed term? My objective is to be mortgage free at the earliest opportunity.
Categories: Interest only vs repayment, Lower mortgage payments, Overpayments, Payment Holdays, underpayments, Borrowback
Posted on 20/08/2007
Hi, I am looking at remortgaging at the end of my fixed rate and want a flexible loan, but dont know whether to go for repayment or interest only, and overpay. The loan is for £130,000 fixed at 6.39% for 15 years with...
Categories: Interest only vs repayment, Lower mortgage payments, Overpayments, Payment Holdays, underpayments, Borrowback, Remortgaging
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not neccessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.