Cannot repay interest only mortgage at end

Bosworth

ILW wrote: »

I think this may be a wind up, the OP seems to not want to answer any questions about when the mortgage was taken on.

To be fair to the OP, it's not their mortgage or issue. They are getting advice for a friend so may not know all the details offhand.

Bos.

ukclare

No THIS IS A SERIOUS POST - but I tuned out somewhat when the spamming and swearing started - this has now been removed.

ukclare

To those still taking an interest - I did not post the length of the mortgage because I knew it would provoke attack! The mortgage was taken out for a very short term - I am not sure exactly but think it was in the region of only 5 years. Yes I know it was STUPID but no it was NOT me - I am simply seeking advice which I will pass on and hope they finally have the good sense to follow!

Cannon_Fodder

I was thinking along the lines that a 20+year-old mortgage could be interest-only, and that they had endowments to back it up, which they managed to cash-in somehow, then re-mortgaged to release equity and the lender was lax in checking the repayment vehicle was still in place. Not impossible with mis-selling etc on endowments.

But a 5 year mortgage for £100k+ without a repayment vehicle? I suppose some shady lender might have done something so stupid.

Who would sign up to such a product, though?

I hope they've enjoyed spending their £100k+ over the last 5 years. They aren't going to have much of a retirement.

Can you see where they have spent £100k+?

Chinkle

Wow - seems incredible that they went into this risky mortgage set up so blindly. Especially as it's not an investment but their own home.

I too wondered how the numbers stacked up at first. But then five years ago financial institutions were falling over each other to lend money on crazy terms.

Your friends didn't just bury their heads in the sand they concreted over them! Well done to you for trying to chisel them out.

I agree with other posters - they need to get the house on the market pretty sharpish at a reasonable price, take the first offer and hope they have enough from the sale to pay off the mortgage, estate agent, solicitor and leave them with a deposit for a rental place.

dzug1

Whilst they may not have been able to find a replacement lender themselves it's possible a mortgage broker will be able to find one for them - maybe worth a try. Or maybe they have already....

BritRael

ukclare wrote: »

...The mortgage was taken out for a very short term - I am not sure exactly but think it was in the region of only 5 years....

This was not a mortgage to buy a home. It was a gamble. They lost. Or, to be more precise, they didn't win. The fact is, even if they hadn't taken this gamble by buying a house to live in (hoping that it would increase in value), they would have had to pay rent somewhere else anyway. So they can now just look on the interest payments as rent paid to live in this house and now they have to move on and find another rental. Nothing lost, nothing gained...

Chinkle

BritRael wrote: »

Nothing lost, nothing gained...

Well as long as they can cover all their costs from the sale.

mlz1413

ukclare wrote: »

To those still taking an interest - I did not post the length of the mortgage because I knew it would provoke attack! The mortgage was taken out for a very short term - I am not sure exactly but think it was in the region of only 5 years. Yes I know it was STUPID but no it was NOT me - I am simply seeking advice which I will pass on and hope they finally have the good sense to follow!

They are lucky to have a friend who cares enough to help them, but I think you are putting a lot of emotion in when they are not.

Assuming they came from rented and bought a house on 100% IO, then they actually haven't lost that much, the Interest was probably not that different to rent. So they got to live in their own home for a few years and now they have to move out. As someone else said it was gamble not a plan.

If they came from a secure council house or very cheap secure rental then they have lost that security, but that was part of the gamble.

Now they need to put the house on the market, achieve the best price they can and hope it pays the legal fees & moving costs and gives them enough to pay the deposit on a rental.

If they are really lucky they will get a few £'000 towards their retirement.

Get them to put it up for sale before the mortgage company does as if they get repossed they could end up owing more money.

ukclare

mlz1413 wrote: »

They are lucky to have a friend who cares enough to help them, but I think you are putting a lot of emotion in when they are not.

Wow - someone is perceptive! They have no idea of the sleepless nights and hours I have spend on the net and on the phone trying to look for answers!

I believe they will have a few thousand out of the deal so hopefully, as long as they are able to sell before things go legal, they should be able to rent. The trouble is that they are stubborn and want to hold out for a good price on the house sale. Our next job is to persuade them that packing away the tons of personal items and a coat of magnolia will help, not hinder, the sale!