advice needed interst only mortgage

gaynor

Hi! 3 years ago, we sold our large 4 bed house and bought a small 2 bed place PLUS a 3 bed house in Spain. The idea originally was to sell up here and move to Spain in a couple of years. I am 49 and hubby is 59, we took out a £75000 interest only mortgage over 10 years (and foolishly no savings or endowment to cover this) on the house in England,- we own outright the house in Spain. Hubby was made redundant from his well paid job, though found work straight away, but less money. Now we cant afford to sell up here and move to Spain, as this house is only valued at £120000 ish, not leaving us enough money to retire on! We paid £89000 for Spain, now worth approx £120000. Any suggestions as to what we should do? We dont want to sell our house in Spain (and the market is dead at the moment anyway), but as it stands, we will still owe £75000 to C&G in 7 years time, with nothing to pay it off with! We dont want to be working until we are in our 70's! If we sell this house, the rent on another place will be double what this mortgage is, so we will be worse off..... help!!
Thanks in anticipation,
Gaynor

mummytofour

Have you looked into extrending the morgage, but on a repayment basies? I would work out how much you can afford each month to throw at the morgage and see how you go.

Or you could do nothing at see what happends in 7 years?

Im sure soembody with better advice will be along soon.

But try not to worry to much, I know not easy, but worry never got anybody anywhere apart from an early grave.

NeilH_2

Hi Gaynor,
You could let the mortgage run for the 7 years left and see if you then have enough profit to retire on - unlikely. You could make capital payments on existing loan, if allowed, to reduce debt and increase equity in 7 years time - possible.

As you took out a 10 year loan 3 years ago, I would suspect you are now not on the best rate available. You could look into remortgaging to a better rate, longer term is not really what you want or practical considering hubby's age. Switching to a repayment over 7 year period is going to be expensive.

Hope this helps a little.
NeilH

MortgageGenie

Is your property in Spain in a letable location?

gaynor

hi! thankyou for your replies, yes, the house is let out, last year it was let virtually all the hot summer weeks, £250 a week, we go over approx 5 times a year
gaynor

Ian_W

There's several different options which have been suggested which you could go for one or more of. Remortgaging to get a better rate if poss, overpaying, switching part or all to repayment, extending particularly if you work as you've 11 yrs to retirement age whereas your hubby has only 6. Look at all of them and see how each fits, some depend on how much you can find [overpaying/changing to repayment] others could help find money to assist paying off [remort/extending the term] and do those that help most NOW. Sooner you act, the more you can pay off.

I still suspect that at some time, though not straight away you may have to make a choice between the two properties and lifestyles. However, if the place in Spain is pretty much paying for itself, you don't need to make the choice perhaps for another 5 years or so. So do as much as you can afford to now to reduce the outstanding mortgage and see how it goes. Things, like property values, etc and the amount you owe might make it look a whole lot different then, than it does now.

BoL.