Hi nearlydone.

We're not experts so please don't rely on these thoughts, but I cannot really see how this could negatively affect your credit file if it's done in full agreement with your mortgage lender.

The issue might be more whether your mortgage lender will agree to this.

my thoughts on why it might have and adverse effect is, although i am still meeting my minimum contractual monthly repayments. when the time comes in October 2018 when all records of my trust deed have fallen off my credit file. Would a possible lender for a remortgage see that for six months (within the last 12 months or so) i was interest only and deem it as a negative. when a credit search is done do they just see for example the green dots to say payment made or do potential lenders see the balance not reducing after each payment. sorry if all this sounds silly but i dont know where else to ask. Your feed back is much appreciated and i understand your position with regards to adivce.

regards

Hi nearlydone.

I cannot speak for mortgage lenders, but again I don't really see what the issue would be.

You're applying for a new repayment mortgage, and the lender will want to assess whether this is a good risk for them.

Two key parts of this decision are your credit rating (your history of meeting your financial obligations) and affordability (your ability to meet the new financial obligation you're applying for plus any others you already have).

I don't see how having been on an interest only mortgage previously would make any material difference to either of these two things.

It might not be an issue to worry about though. I think there's a good chance that your existing mortgage lender will not agree to an interest only arrangement for the purpose you've outlined. Their commercial interest is to recover what's owed to them , rather than to extend their period of risk. I might well be wrong though and there's no harm in asking anyway.

thanks for your feed back on my question again much appreciated. obviously my financial understanding is not great, if it was i would not find myself on this site asking questions. Having said that though i would have thought if for example i took a £100,000 pound mortgage for two years interest only @ 75% LTV. the lender would 'pocket' every payment for 24 months, and at the end of the two years still be owed 100k. i would have thought this would be a very lucrative deal for them or am i missing something ?

regards

They've been under a lot of regulatory pressure about interest only mortgages in recent years nearlydone.

The issue is that loads of people have been ageing towards the end of their mortgage and are suddenly faced with an enormous lump sum to pay and no way at all to pay it. The end result of which is that they're at a lot of risk of not being able to stay in their home, perhaps accompanied by a massive reduction in income at the same time if they're retiring.

A lender might have an open mind about interest only if you'd suffered a temporary income shock (redundancy for example) to help you out while you get back on your feet. Your preference to repay a higher interest debt might not be quite so compelling for them.

The other thing to bear in mind is that mortgage lenders are interested in risk. With a repayment mortgage, the balance and therefore their risk is constantly reducing. This isn't the case with interest only.

i understand your logic in that, i never thought that way as i am a good few decades away from retirement just now unfort. thanks again for the feed back and a 2nd opinion on my question. credit to you and all who input onto this site it has been of great help to me just now and whilst i was going through my TD. keep up the good work 🙂

regards