Interest only mortgages

fluffyb

Hi
I am self employed but my husband isn't. Over the last few months my income has been plummetting and yesterday I found out it will go down yet again next month. This time by a third.

We are in dire straits now - we were before but this has tipped us over the edge.

We have a repayment mortgage costing us £1900 per month with 13.5 years left to run. My husband actually retires in less than 4 years time and will get a lump sum plus a pension.

Our plan has always been to sell up then and move away to a cheaper part of the country and using whatever equity we have on our house + his lump sum to relocate,downsize and be mortgage free.

Now, we need to do something more urgently.I have phoned our mortgage lender this morning and discussed changing to am interest only mortgage on the remainder [200k over 13.6 years] This brings our monthlu payments down by almost £900. They said we have to make provision to pay off the capital in 13.5 years though.

My main question is this. We still intend selling up and relocating/downsizing in less than 4 years and just need to get by untl then or until my work picks up again.

Is making this provision compulsory? If so, what would be the best and cheapest option for us, when we have no intention of paying a mortgage for another 13.5 years and so will not really need to pay off the capital.I hate to use the words 'money down the drain' but given our circumstances it does seem that way.

We both have very good life insrance cover btw.

I hope someone can advise me as they are ringing me later to discuss this and I don't want to have to do it if I don't have to!!!

Thanks

feisty1

If u want advise speak to an adviser
I say that in the kindest way possible, as believe me you will certainly see a lot of opinion on here and it can be misleading. Some are mortgage advisers but others think they are & u wouldn't know the difference

Quote My main question is this. We still intend selling up and relocating/downsizing in less than 4 years etc Quote

The above is exactly what u explain to yr lender and u r not a one off, people do, do this. Some lenders insist on knowing of some type of repayment vehicle in place ie pension isa endowment, but others not Also if clients are feeling financial hardship lenders have an obligation to deal with them sympathetically ie reducing payments by way of changing to interest only

If u change to interest only u know the capital sum wont reduce so yr insurance should reflect that (level term) i expect u have decreasing term at the moment

don't be afraid to be honest with them, u will get better results, they're there to help u. Let us know how u go on, Good Luck,

minimike2

fesity1 - I dont mean to be rude, please dont take this the wrong way, but your posts have been bugging me the last few days - Would you mind not posting in "txt tlk" so much, as it can be very hard to read on a forum post sometimes. Go easy on the red as well.....

confused31_2

if your selling in 4 years time sureley the equity in the house should pay the remainder of the mortgage, how much is the house worth?? if its worth 800,000 pound and you owe 200,000 thousand surely when you sell it you will be able to pay the whole motgage off and still be able to move to another house mortgage free.

Just explain to the bank that when you husband retires you will have the capital, im sure that would be enough, there not loosing anything as you are paying the interest, i think the only time they will have a problem is if you miss payments.

im not to clued up on these things so dont take what i say as gospel, but good luck ad i hope everything goes well.

confused

feisty1

minimike2 quote "have been bugging me" quote

point taken but if we're looking at use of language etc, hardly the best word for an adviser to use if "u dont mean to be rude"

Rikki

If you do change to interest only please make sure you have life cover in place just in case anything happens to either of you.

Eric_Pisch

feisty1 wrote: »

minimike2 quote "have been bugging me" quote

point taken but if we're looking at use of language etc, hardly the best word for an adviser to use if "u dont mean to be rude"

Im sure you do mean well, but your posts certainly come of as abit aggressive. imo of course.

feisty1

Eric Pisch

Did any of them help u?

Eric_Pisch

feisty1 wrote: »

Eric Pisch

Did any of them help u?

Yes your posts have been helpful as have some of the others, and for that I do thank you.

I just think if you knocked it down a gear

feisty1

II Corinthians 11:19 For ye suffer fools gladly, seeing ye yourselves are wise.

unite79

Fluffy, clearly you have the plan in place, which is to sell the property in 4 years time, and use the equity to repay the mortgage.
Additionally given your scenario, reducing outgoings each month appears key.