Be Careful !

Ness19

Hello, new to this so bear with me. We paid our mortgage off after 25 long hard years and then two years ago were persuaded to take out some equity from our house to buy a car, caravan, etc. We took an interest only mortgage for £35,000 out with the Abbey National which was only 5% and only cost us about £65 a month - easy. However, now after two years we are paying back £180 a month, which is crippling us - so think very clearly before you are tempted to take equity out on your house! We are seriously thinking of selling up so that we can be free of this debt again! We are both in our late 50's and didn't think we would be burdened with a debt like this again.

alanobrien

Welcome to MSE, a cautionery tale indeed, thank you for sharing it with us.

I know once mine is paid off - in the dim and distant future, i shall not be letting the bankers get their grubby hands on my equity again.

halloweenqueen_2

Thanks for the warning Ness, once mine is paid off i'm not raising any money on it.
Are there any better deals you could switch to from Abbey? How long was the loan for?

Prudent

I feel the same. I paid off the mortgage early because I wanted to feel the house was 'mine' not the bank's.

comping_cat

Thank you for the warning, i hope that you are able to sort it all out soon x

manhattan

Ness19 wrote:

were persuaded to take out some equity from our house to buy a car, caravan, etc.

have you thought about selling the car,caravan etc to repay most of it back?

and just get an A to B car?

Destined_to_be_skint

Hi Ness19,

Sorry to hear about this. Can you remortgage with another company at a lower rate, or are you tied into this one?

I actually think the banks are at fault here because they obviously didn't make you aware of two things:
1) That the inital interest rate was only fixed for two years and would probably go up after the fixed period, resulting in more expensive interest payments.
2) That an interest only mortgage means that you never pay off the capital borrowed until you sell the asset. Did they make sure you had a separate saving vehicle to pay off the £35,000?

Ness19

Hi thanks for all replies. We have taken advice from a mortgage adviser and we are able to change to a slightly cheaper option, but will have to pay £250 up front to do that. We are not going to rush into this and will look at all the options. We have this debt until we sell the house and then pay the equity back to The Abbey National. You are right, we were not warned that the interest would go up so much and we took advice originally from a mortgage adviser, so feel a bit wary to listen to their advice again. Thank you everyone for your messages. We are seriously thinking about selling up and buying somewhere smaller, just to get rid of this burden. Best wishes