Interest Only - Debt Reduction

Posted on 18 April 2012 by pat


I have just found out that I am still on an interest only mortgage.  I am on benefits and cannot afford a repayment mortgage, as my benefits have just been reduced, is there anything I can do? I still have 20yrs left on the mortgage, but I really want to reduce the debt.  Please can you advise and help

Pat

If you are on an interest only mortgage then any overpayment you make, however small will go towards reducing your mortgage debt.  However, please check with your lender whether or not you can make overpayments without incurring an early repayment charge.  Most Banks or Building Societies will let you overpay up to 10% of your mortgage debt each year, whilst others only allow overpayments of below £500 per month or don't allow any at all.  It all depends on the terms and conditions of your mortgage.

I also recommend that you speak to Citizens Advice Bureau or the National Debtline (0808 808 4000).  They both offer free confidential advice and can help you draw up a monthly budget to see if there is any leeway for making overpayments.  They can also check that you are receiving all the benefits you are entitled to.

Peter

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