intrest only mortgages

storeton

We are a 59 year old couple with an intrest only mortgage with capital to be paid back when we are 65 years old.
The mortgage with Topaz finacials is £178000 and house valued in last 6 months of £250000
Obviously we can just sell up and repay mortgage but is there another avenue I could pursue rather than selling?
One idea has been floated that my son buys house on buy to let mortgage and we cover his costs.He is a 6 figure p.a. earner with no mortgage as yet,however he would like to buy in near future with his girlfriend,
How would all this affect his borrowing power for us and himself?
many thanks
Tony

HappyMJ

How much money do you have? How much will you have when you retire? When the final mortgage is due you won't lose your house instantly. It will take many years as long as you keep on making repayments. You could when you retire be able to claim pension credits and then claim help with the mortgage interest. You may also have a lump sum due to you from any pension plans that you have and that could be used to reduce the mortgage. You need to have under £6,000 cash to be able to claim full pension credit.

However, you said Topaz financial. I doubt the interest rate is low enough to qualify to get all the interest paid at which point the unpaid interest will capitalize onto the loan and they will eventually take action.

I don't recommend your son buys into a buy to let.

hillcats

Have you not got a way of paying off this mortgage at end of term ?

Thrugelmir

At the very least start repaying capital immediately. As the inherent danger you face is that interest rates will rise and property prices fall. Resulting in even less equity being available in a few years time.

Wh05apk

Thrugelmir wrote: »

At the very least start repaying capital immediately. As the inherent danger you face is that interest rates will rise and property prices fall. Resulting in even less equity being available in a few years time.

How would that make any difference, assuming they cannot repay the mortgage in 5 years of so, effectively they will have to sell, at which point their equity and savings will be similar whether they overpay or not?

With regards your son stepping in, he will struggle to get a mortgage (legitimately) as if you remain in the property it will be classed as a regulated btl, which few lenders do, he will also be a ftb, which even fewer lenders do, he could get a residential mortgage for a "dependent" relative, vut that would then reduce the amount he could borrow later.

Thrugelmir

Wh05apk wrote: »

How would that make any difference, assuming they cannot repay the mortgage in 5 years of so,

Fair assumption that the mortgage interest rate will be above that earnt on savings. With retirement looming saving where ever possible and however small is advisable. There are no fix it all solutions just tough decisions to be made.

storeton

We have no provisions to pay anything off final payment and no pension except state handouts and not enough income to overpay.
This was a remortgage in 2000 the original mortgage was £88000

BoGoF

I'm curious as to what you expected to happen at the end of the mortgage term?

Seems like the only option is to sell I'm afraid. If your son was to buy the property then it will severley limit his options to get his own place.

storeton

Yes I know selling will be the(probably) only course open to us as I first mentioned And yes thanks I did know what happens at end of term ,we signed a funny piece of paper called a mortgage contract.
Just looking for positive imput for any possible alternatives
I like many others have had to sell the family silver to make ends meet for the last 10 years and being self employed for 38 years have not have enough disposable income to get an earnings related type pension like some goverment workers have been entitled to and good luck to them as long as it lasts

dimbo61

You dont give the mortgage interest rate but if you can afford too then overpay as this will reduce some of the capital owing.
Build up savings in cash ISA,s upto £16K
Lots of people move into sheltered accomadation when they retire ( my Dad did and he loves it )

Wh05apk

Your options are limited, personally I have never heard of Topaz mortgages, are/were they an adverse/specialist lender? if so, you may be paying a high rate, could you remortgage to a lower rate elsewhere, possibly extending the term to 70 y/o if you are able, and expect to work till then? this will buy you a few more years, hopefully you will then build a bit more equity, it may then be you could downsize, possibly with the help of a small equity release mortgage?