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    • tv21
    • By tv21 9th Oct 16, 3:44 PM
    • 23Posts
    • 38Thanks
    tv21
    Re-mortgaging when Partner is Retired
    • #1
    • 9th Oct 16, 3:44 PM
    Re-mortgaging when Partner is Retired 9th Oct 16 at 3:44 PM
    Here’s my situation. Have a sum to pay on an interest-only mortgage, which is also offset. We’re paying it back over 8 years at too much per month. Our rate’s a bit higher than average, as usually happens with an offset apparently. Our equity’s high, over 60% of the house value.

    Since taking the mortgage out, my OH’s retired and drawing her pension. I’m still employed FT but our combined income would be tight for a loan from our current lender, should they check it. In a year, we’d have paid off a bit more of the loan and it would be more likely to fit their criteria. My goal is to re-mortgage at a lower rate, saving us £hundreds per month. We’ve money sitting in the offset account but would like to keep that separate for as long as possible to cope with roof falling in or similar.

    Our options might be
    1) asking to remortgage with current lender over same time period at lower interest rate as a repayment mortgage. Would they check our income has changed?
    2) going with a cheaper rate with a new lender, using a credit check, but possibly with high fees. Very limited range of choices as our loan is many multiples of our income (and would pension count as income)
    3) getting an IFA to check our options and find us a lender.

    So any suggestions please which of these would be the most hassle-free and speediest route to a cheaper rate of loan?
    Last edited by tv21; 12-10-2016 at 8:15 PM.
Page 1
    • csgohan4
    • By csgohan4 9th Oct 16, 3:46 PM
    • 2,596 Posts
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    csgohan4
    • #2
    • 9th Oct 16, 3:46 PM
    • #2
    • 9th Oct 16, 3:46 PM
    Have you considered retention products with your current lender where you don't need a credit check, usually can do this online
    • Thrugelmir
    • By Thrugelmir 9th Oct 16, 3:56 PM
    • 51,296 Posts
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    Thrugelmir
    • #3
    • 9th Oct 16, 3:56 PM
    • #3
    • 9th Oct 16, 3:56 PM
    Amending the term would result in a review of your circumstances. That's the rule these days. Likewise so would switching to a repayment basis. Reducing the balance significantly would aid your cause though. Would result in sacrificing some savings. Though these could be replenished with a reduced monthly outgoing on the mortgage.

    If the new mortgage extends into retirement for both of you. Then you are going to need evidence of your forecast pension income.

    No harm in running your circumstances past a mortgage broker. Then you would at least know the full range of options available to you.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • tv21
    • By tv21 9th Oct 16, 4:15 PM
    • 23 Posts
    • 38 Thanks
    tv21
    • #4
    • 9th Oct 16, 4:15 PM
    • #4
    • 9th Oct 16, 4:15 PM
    Have you considered retention products with your current lender where you don't need a credit check, usually can do this online
    Originally posted by csgohan4
    Interesting, but with our bank we have to talk to someone online and we’d be worried they’d try to uncover our change of income.

    We’re no longer eligible for the offset took out with them, but would be within limits for a repayment, especially if OH’s pension counts.

    Would they agree to us switching to a lifetime tracker and paying them thousands less in interest when they’ve already got us on their books paying a higher rate? And could they call in our loan as our circumstances have changed?
    Last edited by tv21; 12-10-2016 at 8:16 PM.
    • csgohan4
    • By csgohan4 9th Oct 16, 4:22 PM
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    csgohan4
    • #5
    • 9th Oct 16, 4:22 PM
    • #5
    • 9th Oct 16, 4:22 PM
    Interesting, but with FD we have to talk to someone online and we’d be worried they’d try to uncover our change of income.

    We’re no longer eligible for the offset took out with them, but would be within limits for a repayment, especially if OH’s pension counts.

    Would they agree to us switching to a lifetime tracker and paying them thousands less in interest when they’ve already got us on their books paying a higher rate? And could they call in our loan as our circumstances have changed?
    Originally posted by tv21
    As above poster mentioned, a broker may be the most sensible option, retention products may not be available if you have an interest only option
    • tv21
    • By tv21 9th Oct 16, 4:24 PM
    • 23 Posts
    • 38 Thanks
    tv21
    • #6
    • 9th Oct 16, 4:24 PM
    • #6
    • 9th Oct 16, 4:24 PM
    Amending the term would result in a review of your circumstances. That's the rule these days. Likewise so would switching to a repayment basis. Reducing the balance significantly would aid your cause though. Would result in sacrificing some savings. Though these could be replenished with a reduced monthly outgoing on the mortgage.

    If the new mortgage extends into retirement for both of you. Then you are going to need evidence of your forecast pension income.

    No harm in running your circumstances past a mortgage broker. Then you would at least know the full range of options available to you.
    Originally posted by Thrugelmir
    That’s a bit worrying. We’ve been paying the mortgage on a repayment basis for a few years now, although technically it’s interest-only, transferring money from our bank and offset savings account at a rate which will pay t all off by the end of the full term.

    One advantage of switching to a new lender would be we could keep the savings outside the mortgage, where we could access it in an emergency. We are aware that offset savings probably count against us should we need benefits but we’re not concerned about that at the moment.

    The new mortgage will not be extending into my retirement.
    • Thrugelmir
    • By Thrugelmir 9th Oct 16, 4:44 PM
    • 51,296 Posts
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    Thrugelmir
    • #7
    • 9th Oct 16, 4:44 PM
    • #7
    • 9th Oct 16, 4:44 PM
    Would they agree to us switching to a lifetime tracker and paying them thousands less in interest when they’ve already got us on their books paying a higher rate? And could they call in our loan as our circumstances have changed?
    Originally posted by tv21
    Switching product is an option. Your loan won't be called in. As you've not broken any terms and conditions.

    What multiple is your income to loan. You mentioned in your opening post that it was high.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • tv21
    • By tv21 9th Oct 16, 5:25 PM
    • 23 Posts
    • 38 Thanks
    tv21
    • #8
    • 9th Oct 16, 5:25 PM
    • #8
    • 9th Oct 16, 5:25 PM
    Switching product is an option. Your loan won't be called in. As you've not broken any terms and conditions.

    What multiple is your income to loan. You mentioned in your opening post that it was high.
    Originally posted by Thrugelmir
    The loan is less than 4x my income. It’s also less than 3x our joint income, if they accept pension as income.

    The loan is small compared to the value of the house - about 25%.
    • Thrugelmir
    • By Thrugelmir 9th Oct 16, 5:27 PM
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    Thrugelmir
    • #9
    • 9th Oct 16, 5:27 PM
    • #9
    • 9th Oct 16, 5:27 PM
    The loan is less than 4x my income. It’s also less than 3x our joint income, if they accept pension as income.

    The loan is small compared to the value of the house - about 25%.
    Originally posted by tv21
    Pension is guaranteed income. You've nothing to lose by speaking to your current lender.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • tv21
    • By tv21 9th Oct 16, 6:48 PM
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    tv21
    OK, looked into this and Coventry’s seven-year fix at 1.99% looks interesting but has fees.

    FDs lifetime tracker is at 2.24% but no fees. Either would knock about £300 off the monthly payments for all or most of the remaining term. Plenty of food for thought.
    Last edited by tv21; 12-10-2016 at 8:17 PM.
    • csgohan4
    • By csgohan4 10th Oct 16, 8:00 AM
    • 2,596 Posts
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    csgohan4
    if your moving lender don't forget solicitor fees, survey's mortgage fees e.t.c
    • tv21
    • By tv21 10th Oct 16, 7:08 PM
    • 23 Posts
    • 38 Thanks
    tv21
    if your moving lender don't forget solicitor fees, survey's mortgage fees e.t.c
    Originally posted by csgohan4
    Good point.

    Only reason we’re hesitating about approaching our current lender is whether they’d close the associated bank account that comes with the offset mortgage (or so OH worries, as we’ve now less income than we needed to initially open the account.).

    I don’t see how that could happen, as loads of peoples’ incomes must fluctuate through their working life with sickness, maternity leave, gaps in employment, etc. Can’t see the bank making trouble for us even if they don’t offer us a better deal. Or can they?
    • Thrugelmir
    • By Thrugelmir 10th Oct 16, 8:56 PM
    • 51,296 Posts
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    Thrugelmir
    Once a mortgage is granted. Then you'd have do something bordering on foolish or encounter financial meltdown for a lender to call the debt in. Providing you adhere to the contractual terms you'll be ok.

    You'd more than likely lose the offset account if you switch product. The lender isn't going to force you to use the money in your account to reduce your mortgage balance. I'd suggest that you simply use whatever is required in order for FD to offer you a repayment mortgage. Might even be zero. It's in FD interests to assist you. As interest only mortgages are where problems lie ahead in the future. Providing you meet affordability criteria you'll be fine. You can only ask.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • tv21
    • By tv21 25th Oct 16, 5:20 PM
    • 23 Posts
    • 38 Thanks
    tv21
    Thank you Thrugelmir and csgohan4. It was treated as a re-mortgage rather than a retention deal or product switch but t went pretty smoothly and I don’t think I’ll need to use an advisor now.
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