Mortgage Advice

[TheBaj]

Hi chaps,

Scenario - purchased house 6yrs ago with low (5%) deposit on an interest only mortgage, initially had a 2yr fixed rate mortgage, that expired and we continued with the lenders standard rate which promises to be never more than 2% above base, happy days. For the last 2 years we've been overpaying by a quite considerable amount, it seemed sensible at the time to try and get some equity in the house as the value had probably dropped too.

So currently we've probably just passed the break even point and continue to overpay on the IO mortgage. Now am I better to leave everything as is and continue to over on the current product, or am I best switching to a proper repayment mortgage? I was always of the opinion that I had to remortage to a different product (and have a deposit/equity) in order to switch to repayment, but someone has told me I can stay on my current product and just ask the lender to switch to repayment, is this true?

Currently I know where I am with everything. We overpay by £x and I've a spreadsheet set up that details the future overpayments (based on the current interest rate) and how everything works ok. Eventually we want to move in a few years once more capital is paid off and deposit saved for the next place. What's my best options here?

Thanks

[CaptainSlow]

If you're overpaying you're on an unofficial capital repayment mortgage. You may be better to stay as you are, as you're unlikely to be allowed to move back onto an interest only mortgage if you ever needed to.

However, if you are determined to move to cap repayment I'm sure your lender (Nationwide?) would be more than accommodating.

[Smirnoff]

Well just looking at that, until you have 10% equity you can't remortgage, and with that rate nothing will beat it (C&G?), keep overpaying and build up as much equity as possible.

HTH

[TheBaj]

CaptainSlow said:

You may be better to stay as you are, as you're unlikely to be allowed to move back onto an interest only mortgage if you ever needed to.

That's a good point and one I'd not considered, it's unlikely but you never know. Yes the lender is Nationwide.

Sounds like I'm best to stay as I am then and continue to overpay, thanks guys!