bought my house in 1991 for £85,000. still owe £72,000. changed to interest only mortgage about 3 years ago( due to financial reasons) the intention now is to sell the house around 2009/2010 and paying off the mortgage and moving to nottingham. The mortgage is due in 2013 .The value of the house at present is 270,000.Will I come unstuck? Friends say interest only is a bad idea but I think I have enough equity to buy a house in nottingham with the equity.
2006-07-08 11:53:51 · 10 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Surely when i sell the house in 2009/2010, I will have enough cash to buy a house in Nottingham after paying off £72000 that I owe?
2006-07-08 12:46:21 · update #1
What you need to do is look and see if you could buy a house outright today if you were to sell up. After fees for selling, and fees for buying, you should have about £190k left from your current house if you achieve the value you mentioned.
House prices are relative, so if your property value falls, then so should other properties as well.
The only downside to what you are doing is that you are forcing yourself to sell before 2013. That may not sound like a problem today, but if you have a change of heart you will not really have a choice.
It is better to change it to interest only and be able to make the payments than it is to keep it on a repayment basis and struggle to make the payments. The worse thing you could ever do is not make payments at all because you can't afford it, as the fees and potential for being repossessed are so great.
If your financial position improves, you can always change it back to a repayment.
Just remember that in 2013 you will still owe £72000, and if you haven't sold up and moved to pay it off, you may be forced to.
2006-07-08 20:38:47 · answer #1 · answered by Anonymous · 1⤊ 0⤋
You should be fine, as you have alot of equity in your home.
The aim is to remortgage and get the lowest fixed or discounted interest currently on offer. As you only have 3-4 years before selling, it might be cheaper to negotiate a better deal with your current lender. This way you won't need to pay for the solicitors, surveyors and new lender's administration fees or the penalty fee to your current lender if you have a fixed interest deal.
Some lenders even charge you for changing from interest only to repayments. Repayment is always better than interest only if your mortgage term is long (i.e. over 5 years), as you'll pay less interest with time and also the amount you own will reduce leaving you with more equity when you sell.
You will have to decide what is financially feasible for you at present. If finance is hard then stick with interest only, otherwise choose repayment if the legal fees/charges work out reasonable.
2006-07-08 12:46:26 · answer #2 · answered by Peacelilly 2 · 0⤊ 0⤋
You have no problem and your friends don't know what they are talking about. By the time you pay off the existing mortgage you will have around £200,000. Interest only mortgages are a good product, fixed rate, tracker rate etc, it doesn't matter. When your mortgage is due unless you are 65 you can remortgage.
2006-07-09 06:37:52 · answer #3 · answered by MSMORTGAGE 3 · 0⤊ 0⤋
You are in pretty good shape. Your current equity is about 198,000 (Value minus current mortgage). If you are going to sell within 3 or 4 years I don't think it would pay to refinance to a new loan with payments of interest and principle reduction.
2006-07-08 13:35:14 · answer #4 · answered by green star 3 · 0⤊ 0⤋
Assuming that values do not collapse, you should be fine. If the value keeps increasing at the same rate, you should have better than £200,000 after selling expenses and the mortgage payoff. If your rate is fixed, so much the better.
Values would have to tank SEVERLY before you'd have to worry.
2006-07-08 13:54:40 · answer #5 · answered by Bostonian In MO 7 · 0⤊ 0⤋
i do not imagine it may well be an effective concept. Many facebook customers are acquaintances with acquaintances and individuals they truly understand or have under no circumstances met, and counting on the way you've set your privateness settings, this ideas should be seen to absolutely everyone contained in the international. What you should bear in mind is that some each and every individual isn't as accepting as others, and putting your sexuality obtainable the position each and every individual can see it ought to attraction to hate and homophobic bullying. in my view, it may well be better to come back out gradually by technique of telling those closest to you first and gauging their reactions to the records. in case you do not pick to inform your mom in individual, per chance you should attempt calling her or writing her a letter, as this is a lot less puzzling than speaking head to head.
2016-11-30 21:34:56 · answer #6 · answered by kennebeck 4 · 0⤊ 0⤋
What equity? You are only paying interest. You will not have any money paid on the principle. Your Friends are right. Get out of it.
2006-07-08 11:57:59 · answer #7 · answered by greenfrogs 7 · 0⤊ 0⤋
Bad idea if the rate is variable. Get into a fixed rate mortgage MONDAY!! The rates are going up, and it'll kill ya.
2006-07-08 12:24:16 · answer #8 · answered by gabluesmanxlt 5 · 0⤊ 0⤋
Be careful, be VERY careful. You are making a bet on property valuation increases...I hope you win the bet.
2006-07-08 19:29:06 · answer #9 · answered by homerunhitter 4 · 0⤊ 0⤋
when you have that much equity....
throw a party ....your looking good
live for today tomorrow is taking care of its self.
x x x
2006-07-08 12:30:47 · answer #10 · answered by pa1mcd 4 · 0⤊ 0⤋