Interest only + overpay or repayment ?

[phib]

Having brain fade today !!!

Is there any difference in having an interest only 5 year fixed (1.99%) and over paying by say £2k (to make the payment up to the same monthly cost as the repayment) a month or having a 5 year fixed repayment (1.99%)

The reason I ask as I quite fancy the flexibility of interest only ? Plan to pay the mortgage off in 10 years.

Or am I missing something ?

Hope this makes sense

Thanks in advance

Phib

[Sarnie]

No difference..............satisfying lending criteria for Interest Only is the bigger problem.

[phib]

Sarnie said:

No difference..............satisfying lending criteria for Interest Only is the bigger problem.

Thanks !! Have met the criteria and the rate is exactly the same apart from the survey cost.

Thanks

Phib

[The Moose]

In theory it should be the same however once you start to miss capital repayments then you will end up paying more overall.

Is there any danger of you wanting to overpay more than the allowed amount each year?

[phib]

Agreed, I really don't like the concept of interest only for exactly the reason you state. It might just be useful to have the flexibility in this case for a while host of reasons.

Have no intentions of paying just the interest only amount but you knever know.

Overpayment is 20% PA from memory so should be ok.

Phib

[mondayo]

I have an interest only mortgage...it works for me for a variety of reasons. I've had the mortgage for years and when the original deal ran out, I swapped it onto a interest only.
I'm probably telling you how to suck eggs but on my mortgage (with Halifax) its set up so my payment is set up as a standing order which I then have set at a level that I overpay every month.
Also, years ago when I had a mortgage with Santander, they had a stupid arrangement on the overpayment front and always buggered up the overpayment, and so instead of letting me overpay, reduced the following months payment.

[phib]

mondayo said:

I have an interest only mortgage...it works for me for a variety of reasons. I've had the mortgage for years and when the original deal ran out, I swapped it onto a interest only.
I'm probably telling you how to suck eggs but on my mortgage (with Halifax) its set up so my payment is set up as a standing order which I then have set at a level that I overpay every month.
Also, years ago when I had a mortgage with Santander, they had a stupid arrangement on the overpayment front and always buggered up the overpayment, and so instead of letting me overpay, reduced the following months payment.

Thanks, that's basically my plan, set up a standing order to slightly above the cost of the repayment mortgage

Thanks

Phib