Is it worth swapping to a repayment mortgage?

Q Is it true that it is not worth converting my interest-only mortgage to a repayment one as in the first few years I would be paying compound interest, meaning the repayments won't take anything off the amount of money I borrowed.

I am told that this is especially the case if I intend to change lenders after I lose my initial discount.

So would I be better off to leave it as interest-only and then get a better deal once my discount expires?

MK

A No it isn't true. It's a myth that you don't repay any of the money borrowed in the first few years of a repayment mortgage. It may be true that the bulk of your monthly mortgage payment is interest but even in the early years, you are still starting to chip away at the mortgage debt.

For example, in the first year of a 25-year mortgage of ?100,000 with an interest rate of 6%, your monthly mortgage repayment would be around ?650, of which ?500 would be interest and about ?150 would be repayment of capital. So by the end of year one (and assuming that the interest rate doesn't change), you would have paid off around ?1,800 of the mortgage loan.

So if you want to start repaying your mortgage debt as soon as possible - and can afford the higher monthly repayments - you would be better off converting your interest-only loan to a repayment. However, if there are fees involved in doing this, it may be better to wait until you come to the end of your discount period - but it would be worth asking your lender if this is the case.