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13 July 2014

Worth moving to interest only in a high capital growth area?

Hi guys. My 2 year fixed repayment mortgage is about to about to come to an end, and we're putting our flat (in London) on the market (hoping to move to a slightly larger flat). Now, I wanted to ask. I've always looked at 25 year repayment mortgages, however, as we've enjoyed a nice boost in capital growth for our flat, I'm starting to wonder whether a longer term mortgage (30 years) alongside interest only is the way to go. For instance, rather than spend a significant amount on monthly mortgage repayments. If we're confident that the property will at least hold it's value, if not rise by £20-£30k in two years, then isn't a 30 year mortgage the better bet? The reason I ask is that the lower monthly repayments can then be invested in savings or other investments. Am I mad to think this? Or is there sense in trying to reduce my monthly mortgage payments to as little as possible, and then relying on capital growth? (note: we'll stash any monthly savings). Thanks again. I'll look forward to what the community have to say.

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