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    • goodraw
    • By goodraw 8th Feb 18, 12:17 PM
    • 15Posts
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    goodraw
    Interest Only mortgage ending in2Yrs. Renewal requ
    • #1
    • 8th Feb 18, 12:17 PM
    Interest Only mortgage ending in2Yrs. Renewal requ 8th Feb 18 at 12:17 PM
    Hi,
    I have a 5 year interest only mortgage with nationwide which will be expiring in under 2 years. I wish to renew or remortgage for another 5-7 years.( Iknow that interest only mortgages are being discouraged and being withdrawn).
    I am 62 years old and my income has gone down since I took it out;its unlikely I would get a mortgage from another lender, therefore would be happy if they re-mortgaged without asking for income proof. The mortgage amount is £124,000. My property is valued at around £370000.I have aprox. £160,000 in investments/savings.
    My questions are, would nationwide offer to extend it after when it comes to an end, and is there any chance I could re-mortgage with another lender?
    Last edited by goodraw; 08-02-2018 at 12:47 PM.
Page 1
    • enthusiasticsaver
    • By enthusiasticsaver 8th Feb 18, 2:20 PM
    • 5,689 Posts
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    enthusiasticsaver
    • #2
    • 8th Feb 18, 2:20 PM
    • #2
    • 8th Feb 18, 2:20 PM
    You are right that the majority of lenders now frown on interest only mortgages and if your income will not sustain a £124000 mortgage you may run into difficulties. Many lenders also will not lend past the age of 70 so you may have to restrict the period to 6 years and reduce the mortgage by using your savings/investments to fulfil their affordability criteria.


    What is the plan? To eventually downsize?
    Debt free and mortgage free and early retiree. Living the dream

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    • goodraw
    • By goodraw 9th Feb 18, 11:33 AM
    • 15 Posts
    • 1 Thanks
    goodraw
    • #3
    • 9th Feb 18, 11:33 AM
    • #3
    • 9th Feb 18, 11:33 AM
    I'm getting more interest on my investments than the rate on the mortgage, and I'm in a position to afford the repayments (£300.00 PM).

    Would nationwide offer to renew it automatically as an interest only mortgage, at whatever rate they're offering at the time?
    What is the standard procedure under such circumstances?
    • TrickyDicky101
    • By TrickyDicky101 9th Feb 18, 4:56 PM
    • 2,930 Posts
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    TrickyDicky101
    • #4
    • 9th Feb 18, 4:56 PM
    • #4
    • 9th Feb 18, 4:56 PM
    If the actual mortgage term is coming to an end (rather than just a product expiry date eg say if you agreed a fixed rate for 2 years but your entire mortgage term was 20 years) then I think NW will necessarily need you to pass affordability to be offered a further mortgage (of any type).

    Essentially you want NW to fund your investments.

    Have you spoken to any brokers over this - they are the most likely people to know if such option(s) are available to you.
    • Thrugelmir
    • By Thrugelmir 9th Feb 18, 5:24 PM
    • 57,432 Posts
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    Thrugelmir
    • #5
    • 9th Feb 18, 5:24 PM
    • #5
    • 9th Feb 18, 5:24 PM
    I'm getting more interest on my investments than the rate on the mortgage, and I'm in a position to afford the repayments (£300.00 PM).
    Originally posted by goodraw
    How secure is the income generated and the capital invested. Another interest only mortgage just kicks your problem down the road. As interest rates rise, then your outgoings will increase. Likewise as interest rates rise, the value of your investments potentially may fall.

    We've all enjoyed a decade of free returns and profitable. All the signals are is that era is finally drawing to a close. When to cash in is the decision only you can make.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • goodraw
    • By goodraw 11th Feb 18, 8:43 AM
    • 15 Posts
    • 1 Thanks
    goodraw
    • #6
    • 11th Feb 18, 8:43 AM
    • #6
    • 11th Feb 18, 8:43 AM
    Its the fixed rate coming to an end,actual mortgage expires in 2025.I was previously on a fixed rate, when that finished, they offered me the one I'm on without any questions.
    The LTV is about 34%. I have proof of the £160k investments. Never missed a payment.I would have thought they'd want more customers like me not less.
    • AnotherJoe
    • By AnotherJoe 11th Feb 18, 8:58 AM
    • 8,227 Posts
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    AnotherJoe
    • #7
    • 11th Feb 18, 8:58 AM
    • #7
    • 11th Feb 18, 8:58 AM
    Its the fixed rate coming to an end,actual mortgage expires in 2025.I was previously on a fixed rate, when that finished, they offered me the one I'm on without any questions.
    The LTV is about 34%. I have proof of the £160k investments. Never missed a payment.I would have thought they'd want more customers like me not less.
    Originally posted by goodraw
    Then you need to apply for a retention product because there won't be a income check, same as last time. So look to see what they will offer you online, same as last time.
    Your investments are irrelevant, as someone else said they aren't in business to subsidise people gambling / investing on the stock market.
    • goodraw
    • By goodraw 11th Feb 18, 10:47 AM
    • 15 Posts
    • 1 Thanks
    goodraw
    • #8
    • 11th Feb 18, 10:47 AM
    • #8
    • 11th Feb 18, 10:47 AM
    So do I ask them for a "retention product" ? BTW I'm not gambling on the stock market with my savings; Proving you have assets with which you could pay off the borrowed money is a big plus...
    • Thrugelmir
    • By Thrugelmir 11th Feb 18, 11:46 AM
    • 57,432 Posts
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    Thrugelmir
    • #9
    • 11th Feb 18, 11:46 AM
    • #9
    • 11th Feb 18, 11:46 AM
    So do I ask them for a "retention product" ? BTW I'm not gambling on the stock market with my savings; Proving you have assets with which you could pay off the borrowed money is a big plus...
    Originally posted by goodraw
    They have no control over what you do with your assets.

    I was previously on a fixed rate, when that finished, they offered me the one I'm on without any questions.
    The world has progressively changed since 2008. Regulation has become tighter.

    I would have thought they'd want more customers like me not less.
    Lenders generally operate at the macro level not the micro. Plenty of business in the market without trying to underwrite on a case by case basis. Those lenders that do will recoup the cost.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • AnotherJoe
    • By AnotherJoe 11th Feb 18, 2:51 PM
    • 8,227 Posts
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    AnotherJoe
    So do I ask them for a "retention product" ? BTW I'm not gambling on the stock market with my savings; Proving you have assets with which you could pay off the borrowed money is a big plus...
    Originally posted by goodraw
    Yes, Ask them what deals are available to existing customers to move onto. Thats wha a retention product is. If you do it online there are generally no further checks, which is what happened last time, correct? That may also be the case by phone or by calling into a branch but the lower the interaction you have with them the better the odds they wont ask you any questions you'd prefer they didnt, such as " what are your earnings now"

    BTW I'm not gambling on the stock market with my savings; Proving you have assets with which you could pay off the borrowed money is a big plus...
    Originally posted by goodraw
    You did mention "investments" If those assets are in terms of shares, bonds, funds, yes you are.

    Suppose a month ago you proudly showed them how you could pay off your mortgage at any time as you had £160k in dividend paying Carillion shares to fall back on?
    • goodraw
    • By goodraw 11th Feb 18, 3:07 PM
    • 15 Posts
    • 1 Thanks
    goodraw
    Suppose a month ago you proudly showed them how you could pay off your mortgage at any time as you had £160k in dividend paying Carillion shares to fall back on?
    There are investments out there which guarantee you will get back your original investment. Not everything will turn out to be carrillion.
    It's a matter of how much risk one is prepared to take- but you're taking a risk by walking out the front door everyday because you could avoid getting hit by a bus if you didn't.
    • minimike2
    • By minimike2 11th Feb 18, 5:46 PM
    • 1,933 Posts
    • 1,441 Thanks
    minimike2
    *edit* - Missed a post saying mortgage ends 2025.

    New products do not need an affordability check when the mortgage is already in place.

    Some lenders will swap the rate no questions asked. Some require further proof of the repayment vehicle depending on when the mortgage was originally taken out. Best bet will be to just ask them...
    Last edited by minimike2; 11-02-2018 at 5:49 PM.
    I am a mortgage industry professional. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • AnotherJoe
    • By AnotherJoe 11th Feb 18, 10:47 PM
    • 8,227 Posts
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    AnotherJoe
    There are investments out there which guarantee you will get back your original investment. Not everything will turn out to be carrillion.
    It's a matter of how much risk one is prepared to take- but you're taking a risk by walking out the front door everyday because you could avoid getting hit by a bus if you didn't.
    Originally posted by goodraw
    Irrelevant.

    So in your scenario, Nationwide now need to start vetting your investments, making sure they have the right guarantees*, making sure that 5 minutes after they see you are invested 100% in SuperSafe Money Back Guarantee Acme Fund and they loan you £180k, you dont switch it all to VeryDodgy Fund.

    That is NOT the business they are in or wish to be in.

    * And stand behind that so if they make a mistake and it turns out that indirectly it was indeed all invested in Carillion, they now need to refund you. Again, that is NOT the business they are in or wish to be in.
    • csgohan4
    • By csgohan4 12th Feb 18, 7:57 AM
    • 4,277 Posts
    • 2,678 Thanks
    csgohan4
    Banks don't micromanage their accounts or applications. Nor do they have the resources to do this, and if they did, expect higher interest rates to compensate.


    It was your choice to reduce your income and increase in investments, you can't have your cake and eat it. Just like those with limited companies who choose less income and more dividends for tax purposes


    The lender's role is to ensure you can afford the mortgage which is based on income, investments are that, not income.


    They can go down as well as up whereas income on a permanent contract is generally stable
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
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