Struggling to get off interest only

ShazzaUk

We took out an interest only mortgage 4 years ago with the view of switching it to Repayment after a few years.

We have a 147k mortgage with Halifax and pay £500 per month.

We have an 11k loan with Nationwide which we pay £241 per month, we wanted to add this to our mortgage to free up the £241 so we could use that towards our monthly mortgage payment if we switched it to repayment.

Halifax have refused the further advance application and wont allow us to switch cos our ltv would be 86%. The value of our house is £183,500.
I thought they would want us to switch from interest only.

I dont think any other lender would lend us the 158k because of our earnings.
My husband earns 24k and i earn 9.5k.

So seems our choice is to stay on interest only until our loan is payed off. Then switch to repayment, we have 21 years left to pay our motlrtgage. Dont think we can extend the term as my husband is 47 this year and i will be 42.

Does anyone have any sensible advice please

Thanks Shazzauk

Yorkie1

Others who know more about mortgages than I do, will be along at some point hopefully, but in the meantime have you looked at your outgoings?

I suggest you pop over to the Debt-free Wannabee board and post what they call a statement of affairs. They are very good at helping people save bits here and there, and it all helps.

Simon_gloster

Income and ahe is the issue here.

Even without the loan, a repayment mortgahe would be £x amount per month. Term extension is likely to be a no go.

As you have equity, sell and downsize. Have a much smaller mortgage on repayment.

Please dont come back with ,other areas arent as nice etc.

Think 2033, both retired. Halifax send round their branch manager. We'd like our money back. It happens i'm afraid.

ACG

Your right, lenders wont do £180k on your current incomes.

You can still overpay on your mortgage thoug - even though it isnt a repayment mortgage there is nothing stopping you bringing it down yourself.

ShazzaUk

Thanks for your reply Simon and Acg.

Because of our loan monthly payment we cannot afford to make any overpayments. I think like Simon said we will probably have to downsize and have a smaller mortgage. This is not what i want to do as we have a lovely detached house and would have to move to a semi or terraced. But it is the sensible option and one i think we will have to take.

opinions4u

Overpay. And keep overpaying as if you were on repayment. Or review again when your other credit is repaid.

Once you have officially changed to repayment there's no going back to interest only.

Wh05apk

Sometimes, I wonder if I am replying to the same post as others, income wise you are just borderline for the likes of woolwich/Halifax, the issue will be ltv, you quote the value as £183,500 which is very precise, if the lender was to value it at £180k you would then be over 85%ltv at which level you would struggle to remortgage, also a lot of lenders will restrict debt consolidation to 80% ltv

Your next option would probably be to save like mad to clear or reduce your loan, then change to a repayment mortgage ASAP.

As others have hinted, if you have an interest only mortgage, and a large loan then it looks like you are living beyond your means? You need to cut back now or accept at some point you will need to sell up and downsize/rent.

bigadaj

Wh05apk wrote: »

Sometimes, I wonder if I am replying to the same post as others, income wise you are just borderline for the likes of woolwich/Halifax, the issue will be ltv, you quote the value as £183,500 which is very precise, if the lender was to value it at £180k you would then be over 85%ltv at which level you would struggle to remortgage, also a lot of lenders will restrict debt consolidation to 80% ltv

Your next option would probably be to save like mad to clear or reduce your loan, then change to a repayment mortgage ASAP.

As others have hinted, if you have an interest only mortgage, and a large loan then it looks like you are living beyond your means? You need to cut back now or accept at some point you will need to sell up and downsize/rent.

.... Reading different thread but coming up with the same solutions?

ShazzaUk

I have been going through our figures and thought of the following as an option. Dont know what you guys think?

Small endowment due to pay approx 16k in 2024.
We extend our loan to bring payments down.
Overpay mortgage by 200 per year.

In 2024 with overpayments and endowment paid off mortgage bal woulb be just over 100k.

We would hae 9 years left on our mortgage. We could then either switch to repayment for the balance or sell up and downsize having a smaller mortgage to pay over the 9 years.

Joe_Bloggs

What rate and for how long is the Nationwide Loan ? What interest rate is the Halifax mortgage ? How much extra per month could you afford to pay at present.

J_B.

ShazzaUk

Nationwide loan is for 7 years, rate is a whopping 13.10%.
Halifax current mortgsge rate is fixed at 3.99%.

If we could get a cheaper rate loan elsewhere then we could afford to overpay £200 per month