If one is on a Interest onl ymortgage can C&G the lender "force" you to go onto a repayment ?
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I know i need to move towards repayment, indeed i have a large property with at least 100K worth of equity in it. I would prefer to "control" my repayments myself and therefore afford what i can when i can.
Stantheman
1 year ago
Expert Financial Adviser Answer
Dr David Carter FPFS
answered 1 year ago
No.
The mortgage in place is the result of a contract between the parties and, as long as you do not break the terms of the contract, then the lender has no powers to alter it.
For people who are good with money and perhaps have an income which fluctuates (being self-employed, for instance, or receiving bonuses) then an interest-only loan can be an excellent idea. After all, a repayment mortgage is, in essence, only an interest-only mortgage with regular overpayments.
Such products may allow you to suspend payments completely (once overpayments have been made) or even borrow back the sums overpaid. Although doing so would put your repayment plans (temporarily) off-track, they can mean that you are able to cope during a downturn in your personal finances, without having to move house and perhaps running into debt or default problems.
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The mortgage in place is the result of a contract between the parties and, as long as you do not break the terms of the contract, then the lender has no powers to alter it.
For people who are good with money and perhaps have an income which fluctuates (being self-employed, for instance, or receiving bonuses) then an interest-only loan can be an excellent idea. After all, a repayment mortgage is, in essence, only an interest-only mortgage with regular overpayments.
Such products may allow you to suspend payments completely (once overpayments have been made) or even borrow back the sums overpaid. Although doing so would put your repayment plans (temporarily) off-track, they can mean that you are able to cope during a downturn in your personal finances, without having to move house and perhaps running into debt or default problems.
Stantheman
answered 1 year ago
2 Different properties and both deals in place and no issues with repayments. Therefore everything shouldbe ok as is. Pointless trying to tie these down then as i see it ... leave them on interest only and pay off repayments / overpayments as and when budgets allow.
The main thing is keeping the contract healthy ; no issues and making overpayments when finances allow. Alot of talk on tying oneself down to a five year fixed, but in my circumstances seems better to stick with the SVR deals i have on these 2. Thank you.
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The main thing is keeping the contract healthy ; no issues and making overpayments when finances allow. Alot of talk on tying oneself down to a five year fixed, but in my circumstances seems better to stick with the SVR deals i have on these 2. Thank you.
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
strictly speaking a lender can change your repayment method.
a mortgage can be called in at any time on demand (the lender can ask for repayment of the whole sum) this has rarely if ever been enforced but although you might sign up for a 25 year mortgage it doesnt mean its 100% yours for 25 years.
there are more subtle ways lenders will coerce you away from interest only, halifax is one lender that charges higher rates to interest only loans so some might be tempted either to change to repayment or switch away to another lender.
do bear in mind, from the lender's point of view, that you told them when you applied that you had a method of repayment - many people are relying on downsizing or inheritance to clear their mortgage! lenders used to accept this! but now these are considered unacceptable methods by most lenders.
you mention another property with equity in it, you might do well to consider a shift to move some of that to this property if it will push your ltv down as this would help you to find a better interest rate deal and that in itself might enable you to repay some capital every month.
if you went to a lender today and said that you want to control when to make capital repayments when and if you can afford them, you would not be an acceptable risk.
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a mortgage can be called in at any time on demand (the lender can ask for repayment of the whole sum) this has rarely if ever been enforced but although you might sign up for a 25 year mortgage it doesnt mean its 100% yours for 25 years.
there are more subtle ways lenders will coerce you away from interest only, halifax is one lender that charges higher rates to interest only loans so some might be tempted either to change to repayment or switch away to another lender.
do bear in mind, from the lender's point of view, that you told them when you applied that you had a method of repayment - many people are relying on downsizing or inheritance to clear their mortgage! lenders used to accept this! but now these are considered unacceptable methods by most lenders.
you mention another property with equity in it, you might do well to consider a shift to move some of that to this property if it will push your ltv down as this would help you to find a better interest rate deal and that in itself might enable you to repay some capital every month.
if you went to a lender today and said that you want to control when to make capital repayments when and if you can afford them, you would not be an acceptable risk.