Mortgage Advice?

oceanscape

I'm 57 years old and looking to re-mortgage for £200,000 with interest-only repayments. My house is worth £400,000 and our household income is £60,000. The aim is for us to stay in our current house for 5 more years then down-size and pay-off the mortgage in full.

What is the chance of getting a decent deal for a mortgage of this value, especially given my age? Any advice on where I should be looking? Somebody told me that I won't have any luck and should just stick with my existing mortgage provider?

Thanks for any advice.

getmore4less

what deal has the current provider offered? and what are the current terms

That is the starting point for any comparison.

dunstonh

On assumption that house is worth £400k now, you are borrowing £200k and you will lose £100k in value over coming years and costs of moving etc, that will leave you £100k of equity in 5 years time.

Will £100k be enough to buy a property that you would be comfortable with?

Peelerfart

dunstonh wrote: »

On assumption that house is worth £400k now, you are borrowing £200k and you will lose £100k in value over coming years and costs of moving etc, that will leave you £100k of equity in 5 years time.

Will £100k be enough to buy a property that you would be comfortable with?

That's a very depressing assumption if you don't mind me saying

oceanscape

dunstonh wrote: »

On assumption that house is worth £400k now, you are borrowing £200k and you will lose £100k in value over coming years and costs of moving etc, that will leave you £100k of equity in 5 years time.

Will £100k be enough to buy a property that you would be comfortable with?

Huh? So house prices are going to fall 25% over the next few years? How can you be sure? It's a guessing game and it's a risk we'll have to take. And if the value of our house DID fall 25% then the value of the house we would want to buy would be down by 25% too, so the issue isn't so clear?

dunstonh

Huh? So house prices are going to fall 25% over the next few years? How can you be sure?

No-one can be but a 35% drop overall is a common figure coming out with many commentators. In the US, housing has fallen in some places over 30% and is still going down. They are a few years ahead of us and historically what happens over there hits here a year or two later. Plus, we have barely started with the recession here. You have another million or so to be made unemployed. House respossessions are still very low but expected to rise. We are just 18 months into this house price crash. The last one was over 4 years and took 11 years to recover (regional pricing will vary).

So, you have to be prepared that it is a possibility. indeed, we are possibly already there with buyers being encouraged to offer as much as 25% below estate agent price.

And if the value of our house DID fall 25% then the value of the house we would want to buy would be down by 25% too

OK, so, lets say 25% down on both. You lose £100k on yours and the £200k one loses 50k. You are still out of pocket by 50k.

In a house price crash, those moving up can do well out of it. Those moving down do worse.

oceanscape

Thanks for your input, dunstonh. It is appreciated. I will bear all of that in mind and we clearly need to re-consider selling now instead (although, for family reasons this is very difficult). My key question is how likely it is that it will even be possible for me to re-mortgage at all given my age and the high mortgage required?

Matty0682

oceanscape wrote: »

Thanks for your input, dunstonh. It is appreciated. I will bear all of that in mind and we clearly need to re-consider selling now instead (although, for family reasons this is very difficult). My key question is how likely it is that it will even be possible for me to re-mortgage at all given my age and the high mortgage required?

I am in the same situation. House is worth around £250k, but I am relocating (London to Wales), so I will need a smaller mortgage due to smaller salary.

I am in firm belief that prices will continue to fall for the next few years (lagging America like dunstonh said), so I have decided to sell in London, and rent in Wales (leave the housing market for a few years). I am even willing to pay a £6k Early Repayment Charge on the mortgage to do this.

If you are in a situation where you know you are definitely going to move at a later date (like yourself), there is no harm selling up now to leave the market of a few years.

Robert_Sterling_3

Matty0682 wrote: »

there is no harm selling up now to leave the market of a few years.

sell now ... get cash ... high inflation ... Cash loses value

that is the harm that might follow a sale

Matty0682

Robert_Sterling wrote: »

sell now ... get cash ... high inflation ... Cash loses value

that is the harm that might follow a sale

I will put my money into Index Linked Saving certificates from the Government (currently RPI +1), there are a 3y & 5y certificate (from National Savings and Investment). They are also tax free