The Fixer: Interest-only mortgage trap
It can seem impossible to get a fair result when you are battling a financial issue alone. But never fear! The AOL Money Fixer is here to help.
I have an interest-only mortgage with NatWest. I took out the mortgage several years ago, and have a repayment plan in place to pay off the rest of the debt.
However, NatWest will not let me increase my mortgage because it has stopped offering interest-only mortgages.
And that is a problem because I need to move to a bigger house as my wife is pregnant with our second child.
Am I trapped as a result of my decision to take out an interest-only mortgage all those years ago? Any advice you can give me about my options would be very gratefully received.
T Shaw, London
Dear Mr Shaw,
Interest-only mortgages were a popular way to borrow in years gone by. In fact, recent figures suggest that more than half of all outstanding mortgages on homes in the south of England are interest only.
Now, however, lenders are now much more cautious about deals of this kind and many - including NatWest - have either tightened up their criteria or stopped offering them altogether as a result.
The good news is that many lenders will still allow customers on interest-only deals to increase their mortgage debt – with the extra credit borrowed on a repayment basis.
Certain rival lenders may also consider letting you borrow more via an interest-only deal, while there may even be the option of switching to a repayment mortgage altogether - although you must be prepared for higher monthly payments if you do this.
What is right for you will depend on your individual circumstances, including how much you owe, how much the property you want to buy is worth and the terms of your current deal.
My advice would therefore be to contact an independent mortgage broker who can help you make the right decision.
Whatever your financial problem, write to firstname.lastname@example.org and The AOL Money Fixer will get on the case.