extend mortgage term or interest only?

[gemma36]

Hello, I'm new to posting here and would love some advice. We currently live in a new build (mortgage of 320k left, probably not in neg equity). We had planned to sell our old house when we moved into our new one but unfortunately that was just at the time of the crash and it didn't sell. We have been renting it since and paying interest only but now the bank want us to pay full capital repayments. The outstanding mortgage is 240k, value is 150k, 10 years left on 20 year mortgage. the rental income (700 pm) covers the interest only (450), fees etc and we are just about mananging to keep this going and keep up our own home repayments. Full capital repayments would be 2k a month which we obv cant afford! We've been in discussions with the bank and they said the most we could extend term to would be 32 years costing 800 per month or they would give us one more year if we upped our monthly payments to 550 and then up to 700 after one year.
Would we be better trying to stretch to 800 a month and extend term and at least be paying off some capital? Or stay as we are at 550 for another year? Tryand sell it and see if bank would do any deal on N.E? (we are on low tracker).
Thanks so much in advance for any help or advice.

 

[cremeegg]

You have not included much detail of your income and expenses or your mortgage rates etc, so in giving an opinion something may be missed.

Also please break your post up into 1 idea per paragraph. It is much easier to read.

Having said that here goes.

I suggest paying the bank the rental income from the let property €700 per month.

Don't pay by direct debit, pay by a method where you activate the payment, standing order is probably easiest.

The bank may not agree to this enthusiastically but I imagine that they will accept it.

You will be reducing your capital balance by €3,000 a year.

It also sets a precedent for when interest rates rise. You are paying the bank the rent, no more.