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Interest Only Mortgage (making additionl payments query)

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  • 20-01-2009 11:58pm
    #1
    seanie500
    Closed Accounts Posts: 263 ✭✭


    Question there on interst only mortgages.

    Have one of these ( Variable rate) and want to start lodging in extra amount against my mortgage each month to reduce the balance. question is whats the best way of doing this? is it setting up a direct debit and lodging in an additional amount each month.

    I dont want to get onto my bank and say i want to change to paying capital and interest as i assume the rate will continue to fall so dont want to get locked into a rate ( for the 1st year) or will beank just offer the variable rate straight off. sorry for the long winded question!


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    #2
    Brainz
    Registered Users Posts: 205 ✭✭Brainz


    You are on a variable so you can just make lodgments into your mortgage account - call up your lender and tell them you want to make overpayment and want to set up a standing order to facilitate this - or else you can just send a chequ in every month with a note asking to lodge this into your mortgage account


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    #3
    Show_me_Safety
    Closed Accounts Posts: 280 ✭✭Show_me_Safety


    seanie500 wrote: »
    Question there on interst only mortgages.

    Have one of these ( Variable rate) and want to start lodging in extra amount against my mortgage each month to reduce the balance. question is whats the best way of doing this? is it setting up a direct debit and lodging in an additional amount each month.

    I dont want to get onto my bank and say i want to change to paying capital and interest as i assume the rate will continue to fall so dont want to get locked into a rate ( for the 1st year) or will beank just offer the variable rate straight off. sorry for the long winded question!

    Lodging money into an IO mortgage will sit in credit on the account and reduce the amount of interest accured on a monthly basis. it will have the same effect as it being taken off the principal but as far as i know it won't actually be taken from the principal until you are making principal and interest repayments.

    you should not be locked into a rate just for deciding to pay principal too.
    the rates are low so you may as well take advantage of them by paying some principal too!


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