Mortgage enlightenment

Hi all,
a question of Interest only mortgage has me confused. I have an investment home I bought a number of years ago, a little farm house (retirement perhaps as opposed to Investment) I took out a interest only mortgage. I have my own home which I have a mortgage and recently switched to ECB rate, I asked in ignorance could I switch interest only mortgage and they siad no as its still fixed and remains locked as interest only until November 2008. In any case I have recieved a mail syaing they have my new rate as Interest only mortgage has come to end, which is fine, but the rate they gave me is ridiculous. I asked if I could swithc to ECB or any other one and they told me no " you are locked in until 2010" this has me at a loss. Is that the norm they automatically lock me in until 2010 at thier own rate, because I was nt aware, if my chcoice I would have gone on ECB or something. Anyways just wondered am I completely missing some thing here just they sounded so sure and confident on the phone/letter.

Rgds
Maximuss 152

Not sure if I'm understanding your query correctly. Interest-only repayments and the interest rate applied are two separate issues.

Is it that your interest-only period was until November 2008, but you're on a fixed rate of interest until 2010?

No Sorry I wrote an confusing mail, I have it since 2007, now the interest only otion has come to an end, and I go on to paying off the capital i.e normal mortgage. In case I think they have me over a barrel but thanks for reply.

It sounds like you initially chose a rate of interest that's fixed until 2010. You can break out of this to go on a variable rate, but that may well incur a penalty. You could ask your lender what the rate is, what the penalty might be for switching to variable and what the variable rate is. Then it's possible to see if going variable is worth paying the penalty.

Thanks LDF, yes I will incur a grand total of 3000 Euro.... seems they seen me coming lol...thanks for input.

Later
Maximus152
Honour Him

Reriginal post. Imanaged to find all my paper work and correspondance with bank when I last asked/apppoved a rate change in October 2008. I was on a interest only mortgage, and as rates were in creasing I asked to lock in at October rate (equated to about 600 Euor p/m) as I knew if rates went up I might not be able to cover costs I was happy to lock in for 3 years. Now the probelm! When they sent me the offer it showed how much I would pay every month for 3 years .ie 600 E. That was fine until November when they sent me a new mail telling me that my interest only had come to an end and there fore I would now be paying approx 870 Euro p/m until 2011. So my point is, I had only agreed to initial figure as it looked like I would pay 600 pm unntil 2011, there was no mention of interest only addition (they say I should have known this). So I feel as if i have been given misleading info as I never would have agrreed to pay that as the rent I recieve would never cover it. When I tell the bank this they just say well you agreed and thats it was obvious, but I have the paper work, I have shown to some friends and its far from obvious so much so that it say cleary fixed rate until 2011 (600 pm). Any advice would be please, or should I just bite bullet, its just I am usually meticulous about these calculation.

I think I'd make an appointment and go in to them with a photocopy of the Oct 08 agreement for 600pm, and ask them to check their records.

Is the problem that the October paper only showed the interest amount, but they're now charging interest+capital? If they're unwilling to budge, or can prove to you that you knew about the additional payment, then maybe ask if the duration of the mortgage can be increased (though at a rough guess this could more than double the duration of your mortgage

Thoie, thank you for reply.
Yes they sent out the usual bank letter with new rate change and what my repayments would be until 2011 i.e 600 p/m. They had the rate that I had excepted and the term of the agreement 2011 and the type of rate, fixed. There was only one figure and that was the interest, which was 600E, and so I in my utter nievety said well 600E for three years, that can't be all that bad, I can at least manage that if things get tight. That was until 2 months later they send me a new letter telling me my repayment would now be 600 plus the capital making my repayment of a cool 870 pm, which I would never have locked in for 3 years. I think going to see them face to face may be the best thing I can do. Than you again.