Query re: Interest Only Conditions

M

marvin

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We have a tracker mortgage with KBC (ECB +1.1%). As a way of clearing some short term loans we have asked KBC about the possibility of an interest only period for a year or so.

They have said no problem - we can do so for up to 3 years. However they have stipulated that we must change to a standard variable rate for the duration of the interest-only period and then revert to the tracker.

The Standard Variable rate is currently 3.99% as opposed to the current trakcker rate of 2.6% - which makes a considerable difference to the monthly interest payment.

Are they entitled to insist on this condition? Is there any point in us trying to negotiate a better rate? Any other advice would be much appreciated.
 
Apologies if I'm breaking any rules by re-posting but can anyone please give me advice on this?
 
They are entitled to insist on this, if they want to.

Are you absolutely sure that they will put you back on ECB + 1.1% tracker when your interest-only period ends? This sounds unusual to me - many lenders are trying to get people off trackers permanently. Get it in writing that you will revert to a tracker of ECB + 1.1% after your interest-only period ends. If you can't get this in writing, don't do it.
 
Thank you very much for the reply Liam.

Yes, they confirmed in writing that they will allow us to revert to our tracker at the end of the interest-only period.
 
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