long term mortgage planning advice needed

Simon_c_2

Hi,
I could do with some advice from the experts here about where to go long term with my mortgage etc.

First, the background. I separated from my partner (non married) about a year ago, we are both joint owners of the property where I live. (she moved out)

there is an interest only mortgage, of around £235k against a property value of anything between £250k and £280k depending on who you speak to.
The mortgage is an unbeatable, interest only tracker base+0.95% with 18 years left to run. There is no savings product running with the mortgage.

Over the last year I've been paying down the debts that were accumulated during our relationship (all in my name) and that should be finished in about another 12 months or so. I'm currently paying these down at around the rate of £400/month

Current mortgage payment is around £300/month, with an extra £50/month for every 0.25% hike in base rates.

Income is around £2200/month and with all the regular outgoings ( heating, council tax, child maintenance, mortgage, debt payments etc) I typically have around £500-700 /month for food petrol, and anuall items like insurance, and to put towards holidays etc. May be £100-200 of that is discretionary spending that I could choose not to spend, (but you can't put together a long term, multi year financial play with no discretionary spending)

So, now the end of the debts is in site, I need to start figuring out what I do with the house, the mortgage.
Obviously repaying any capitol form the mortgage would be silly as not only is it a cheaper debt than cash savings rate, half of it would also go to the ex when I sell.
The mortgage is portable, so downsizing is a possibility, but to get a house that is still close to the ex (we share the kids) would probably only reduce the mortgage by £50k max. (And that's assuming the mortgage company will transfer it to my sole name for the smaller value, which they might not)

So, short and medium term, I'm comfortable, probably even more so when the debts are paid off :j. Long term, I'm homeless in 18 years if I don't change anything. :eek:

Currently, I've vague plans of starting a stocks ISA saving scheme at around £400/month once the debts are paid off, so if nothing changes, at least there's going to be a pot of something to go with any capitol left in the house for me to do something with in 15-18 years time. Oh yes, I'm 40, so (making assumptions about staying in professional work) I've probably got around 25 years full time working life left. (I'm probably putting far less away in a pension than I should be doing too, as I'm only putting 6% away, and my employer is putting in an additional 4%)

So, does anyone have any ideas on what areas I should look at ? pension linked mortages ? ISA wrapped endowments of some kind (do they still exist ?) down size in 5 years when the kids are older and could a) share a room when they are here without killing each other and b) I don't need to be *quite* so close to the ex. Put my head in the sand and think about it all in 10 years time ? (what I'm inclined to do if I'm not careful. !) Afterall, I might have got some good promotions at work :rotfl:


Any ideas, advice and thoughts gratefully received.


Simon

CloudCuckooLand

Maximise your Cash ISA allowance. Dabble with Stocks? Perhaps. Wouldn't rush into it, with uncertainty around. You might need ready cash.

Will the Ex come asking to be taken off the mortgage, if she wants to get her own place, any time soon ? That could defeat any planning. As your income cannot support a £50k cheaper property let alone the one you are in.

If she is patient, down-sizing could become an option. If not, keep your cash ready for renting.

Thrugelmir

You must address the issue of the house. Not only to resolve matters with your ex partner but to secure your own future.

On your income the property is unaffordable. Unless you make a concerted effort to repay the capital. At current interest rates on a 25 year term the monthly outgoing is £934 on a repayment mortgage. Interest rates are going to rise at some point in the future.

Suggest you realign your thoughts to what is achievable rather than desirable. Not easy to do but necessary.

dimbo61

Well £300 a month for a house is very cheap living and even if rates do go up you still wont be paying that much to live in a 2/3 bedroom house.
There is little if any equity in the property! If your EX forces you to sell you would be lucky to get over £250K ( stamp duty) in the current market and hopefully as long as she is getting maintence each month off you and you explain there is no equity she might want to wait however long it takes for the market to pick up.
Build up savings in cash ISA,s while clearing the rest of your debts and sit tight

neverdespairgirl

Simon_c wrote: »

there is an interest only mortgage, of around £235k against a property value of anything between £250k and £280k depending on who you speak to.
The mortgage is an unbeatable, interest only tracker base+0.95% with 18 years left to run. There is no savings product running with the mortgage.


Currently, I've vague plans of starting a stocks ISA saving scheme at around £400/month once the debts are paid off, so if nothing changes, at least there's going to be a pot of something to go with any capitol left in the house for me to do something with in 15-18 years time. Oh yes, I'm 40, so (making assumptions about staying in professional work) I've probably got around 25 years full time working life left.

Any chance, do you think, of buying your ex out of the property now? That would make longer-term planning an awful lot easier, surely?

the value's very unlikely to be more than £250k if that's the range, because the stamp duty threshold kicks in at that sum.

If you save £400 a month for 25 years, at an average interest rate of 4%, you'd end up with about £205,000 at the end of that saving. If you get an average rate of 5%, you'd end up with about £238,000