I’m a mortgage tart!

I’m a mortgage tart!

by Readers Question

Guest Author

15:48 PM, 23rd August 2013, About 11 years ago 11

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The government wants the banks to clamp down on interest only mortgages. Obviously there are tax advantages for these mortgages with BTL properties but can someone explain this situation on our own home mortgages: I always change my home mortgage every 2 or 3 yrs to take advantage of low introductory rates. Now as I see it you don’t really start to pay down the capital of a standard mortgage for several years. If I didn’t have an interest only, then by chopping and changing I’d be paying a highly monthly payment but not seeing a reduction on the overall balance. Does my Buy to Let lending criteria make senseI'm a mortgage tart

I’d like to come off int only mortgages but I’m not prepared to move onto the banks standard rate once the deal is over. We have a huge amount of equity in our rental properties so I’m not worried about being able to pay off our home loan once we choose to so.

Can someone tell me if I’m talking nonsense or how to get around this situation.



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John Constant

8:01 AM, 1st September 2013, About 11 years ago

You may be interested to hear that just this week, the Financial Conduct Authority have published a report with regard to how lenders should treat Interest Only residential borrowers fairly.  Some of the options outlined include allowing switching of the mortgage to a full or part capital-repayment basis, extending the mortgage term, or accepting overpayments.    The new guidance on treating interest-only customers fairly will come into effect with the Mortgage Market Review, on 26th April 2014.

I would like to stress that although the preferred option for Mark is to remain on an interest only deal, there are many excellent deals available for those who wish to "bite the bullet" and change to a repayment mortgage.  However, there are certain lenders who will accept an Interest Only option with no repayment strategy, IF there is a certain amount of equity left in the property, to in effect, trade down in later years.


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