My husband and I are both in our 50's, we have a small capital repayment mortgage which we would like to change to interest only. We have a large inheritance coming and are both retiring so would like to keep our monthly mortgage payments down until the inheritance pays off the mortgage, can we switch it over?
It may well be possible to change your repayment method with your existing mortgage Lender, that would certainly be a good starting point especially if you are currently 'tied in' to them with an early repayment charge if you switched lender. They may have criteria you need to meet before they allow you to do it. If your lender doesn't agree to changing, it may be possible for you to remortgage to another lender on an interest only basis. Many lenders currently limit Interest only borrowing to a maximum of 75% loan to value and state a minimum eequity of at least £150,000k in your home. So if your house was worth £400,000 then the maximum interest only would be £250,000 because although you are borrowing much less than 75% of the value you would need the £150,000 of equity remaining. You will most likely need to have a repayment plan to finally pay off mortgage, inheritance would not be one of them - pensions or the actual sale of the property are two typical repayment methods. For a specific answer please complete an enquiry form to speak to a mortgage expert.
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