Interest only mortgage

[DKL]

So with the world and their dog pulling out of this market faster than a fast thing does anyone have a crystal ball?
I need a good option for about 3 months time. This I fear will be about 2 months too late.

[Sarnie]

What will the LTV be and what will your intentions be to repay the loan?

Residential or BTL?

[DKL]

Liam,
LTV about 68%, other vehicles in place to pay lump sum off - that's part of the issue as I wouldn't pull these as its not worth it so I suddenly start paying twice to cover the loan with a repayment.
Residential.

[Sarnie]

There will be lenders who will do it at 68% but the choice will be more limited than it was previously.

For example, Woolwich now have a minimum loan size of £300k, Abbey limit the LTV to 50% and Natiownwide just don't do them at all any more.

[DKL]

Plenty around at the moment but the penalties for coming out of my current one a bit early are prohibitive. Just hoping some people stay in for a couple of months longer!
Thanks

[Sarnie]

DKL said:

Plenty around at the moment but the penalties for coming out of my current one a bit early are prohibitive. Just hoping some people stay in for a couple of months longer!
Thanks

They do seem to be dropping almost daily......I'm sure there will be sufficient choice available still in the next few months, although this may not be in case in a few years time so you may want to look at longer term products potentially?

[RichS]

Noddy question but if I can find an I/O mortgage at a lower rate than a savings account, then am I better just moving from repayment to I/O and setting aside and saving the repayment amount each month (assuming I don't pay tax on my savings)?

Extrapolating that, would it also make sense for me to borrow more than my existing mortgage amount up to the relevant LTV threshold and banking that equity, earning interest on it and pocketing the difference between the interest I receive and the interest I have to pay?

I was just wondering if the two sets of interest might be calculated in a way that might catch me out.

[no effort]

RichS, I'll be surprised if you can make any real money from what you are suggesting.

People that have got a low rate tracker mortgage from years ago are probably wise to do this but I can't see how you can make a decent return with todays mortgage and interest rates.

[mx stu]

DKL said:

So with the world and their dog pulling out of this market faster than a fast thing does anyone have a crystal ball?
I need a good option for about 3 months time. This I fear will be about 2 months too late.

Sarnie said:

They do seem to be dropping almost daily......I'm sure there will be sufficient choice available still in the next few months, although this may not be in case in a few years time so you may want to look at longer term products potentially?

Obviously Sarnie is the man who knows, but can't you begin the process of applying for a new mortgage before your current one has ended and then just switch when you are penalty fee free? Or is three months too long for an offer to remain valid?

[Sarnie]

mx stu said:

Obviously Sarnie is the man who knows, but can't you begin the process of applying for a new mortgage before your current one has ended and then just switch when you are penalty fee free? Or is three months too long for an offer to remain valid?

Yeah, if he really wanted to secure a product now he could, as long at the expiry date of the current product is within 90 days.

[98elise]

RichS said:

Noddy question but if I can find an I/O mortgage at a lower rate than a savings account, then am I better just moving from repayment to I/O and setting aside and saving the repayment amount each month (assuming I don't pay tax on my savings)?

Extrapolating that, would it also make sense for me to borrow more than my existing mortgage amount up to the relevant LTV threshold and banking that equity, earning interest on it and pocketing the difference between the interest I receive and the interest I have to pay?

I was just wondering if the two sets of interest might be calculated in a way that might catch me out.

That is very unlikely to happen. The nearest thing would be an offset IO mortgage, which lets you use your savings to effectively reduce your mortgage. Its very tax efficient.

[DKL]

Sarnie said:

Yeah, if he really wanted to secure a product now he could, as long at the expiry date of the current product is within 90 days.

Current lenders will start negotiations 120 days before the old one stops and most others quote 90 days it seems. That is still 3 months away (before the 90 days starts) in my case. Was trying to be organised!

[Maryben]

Some re-mortgage offers are valid for longer than three months. Had two offered today, one Woolwich and the other Skipton Building Society, both valid for 6 months.