Cost of living support (Mortgage)

Mortgage has increased by a few hundred quid but noticed that Mortgage Lenders are offering Cost of Living Support 6months Interest Only. This would help me settle into paying capital and interest.
I am currently in a fixed deal for 5 years so if I did take this option of 6months Interest only would I go back onto the same rate that I have fixed at the end or would I be put on a higher rate?

You’ll need to speak to tbe lender. It should be a conversation without prejudice though .

How has your mortgage increased by a few hundred if you’re on a fixed deal?

Yeh exactly that – fixed to a new 5 year deal in August.

fixed to a new 5 year deal in August

It sounds like your lender’s affordability check was a bit slack then.

Taking a new ‘deal’ from your existing lender doesn’t usually attract affordability checks. They just swap you over onto the new rate and keep taking the money.

If you’ve just locked yourself into a 5 year fixed that you’re struggling to pay, a 6 month interest only situation is only kicking the can further down the road. What happens in the following 4.5 year period?

You’ll have to speak to your lender to find out what approach they would take. Its either increase the term of the whole mortgage, or increase your repayment amounts over the life of your existing mortgage deal.

You’re probably going to have to jump through a lot of hoops to get the lender to agree to pausing things, especially if you’ve only recently agreed to a fixed rate deal. Cross your fingers and read the small print.

You don’t have to jump through hoops to take advantage of the government backed mortgage charter, you might even be able to do it online without speaking to anyone. And you will revert to your rate once this period is over.
we did six months interest only without issue, this was because there were 2 parts of a three part mortgage about to jump from 1.4%  right at the wrong time due to the antics of Lizzy Truss along with a job change/period of unemployment. Wasn’t bothered about kicking the can down the road as another property is going to be sold in a few months time which will cut the mortgage in half.

do check the sums though as changing the duration of the loan is also an option on the charter and you need to work out what’s best for you.
you may find saving up while on interest only with the aim of paying the exit fees and remortgaging at a lower rate works out better in the long run as rates will likely drop a little further.
sounds like you may have taken a 5 year fix at the wrong time, sometimes this just happens as we don’t have an accurate crystal ball.

Are there any negative implications of doing this? Sorry for the thread hijack. I’m tied into a ridiculously low rate for another two and a half years. It would make sense for me to switch to interest only for as long as I can, pay that and put what I would hace used to pay capital into something which pays a lot more interest. Would this screw up my credit rating or anything? Can you use this six months interest only thing more than once?

all your questions are answered by googling ‘mortgage charter’ and the name of your lender.

your credit rating is not affected, you can only do it once, you can’t arrange or lock in a deal while on it and it isn’t available for consent to let or buy to let.

Great, thanks.

Hijack over, as you were everyone

I would of thought your bank would be happy to switch you to interest only if on repayment, just give them a call they will be more than happy to help.