Interest only ends when I am 65

Dave_Ham

In answer to the questions, Nationwide will currently lend the maximum age of 75 years old.

I would imagine your actual question is are they likely to extend your term to this age and then whether on your exsiting attractive BMR rate

No-one knows exactly what the answer will be, as all the banks are wary of this sort of situation and almost seem to deal with on a case by case basis.

My personal opinion is that they are highly unlikely to just honour your current terms and to be fair, why would they?

Given you are unlikely to get another interest only mortgage, things are going to be tough..

Good luck

HappyMJ

As long as you keep paying the interest then the mortgage could continue indefinitely....but that really depends on the mortgage provider. They will not force you to sell very quickly in any case. They will probably extend to 70 then once you hit 70 they'll come to an arrangement rather than force you to sell.

Can you use any pension lump sum to make a large payment onto the mortgage?

Will you be claiming Pension Credit? You could get the interest paid on your mortgage through the DWP.

paulo100

Good replies, thanks.
I think I will be talking to them soon to gauge their position. As I have said my preference will be to continue until 70. I will be able to prove my ability to make payments so that shouldn't be an issue in itself.
No, I won't be eligible for pension credits.
I could make payments to reduce, or even pay off, the outstanding amount, it's more a case of I don't want to do so until I am older (70).
Thanks for all your helpful replies.

holly_hobby

If you are looking for an open ended interest only mortgage with no repayment vehicle (ie only redeem when you die or sell ) - then you are no longer going to acheive this with a residential mortgage lender (YBS and Halifax whom offered variations of this, have long since pulled out).

So, the max age at redemption (with all but 1 lender I know of) is 75 yrs (in fact on an interest only mortgage, its only 65 yrs with HSBC).

NWide may agree to extend by 5 yrs (subject to affordability assessment) - the aim being to give you sufficient time to make alternative arrangements, but they won't and can not extend indefinately.

You should also be aware that under the FSA review, all lenders have a duty to verifty at least once during the term of an interest only mortgage, what the repayment vehicle is and if its suitable - so therein lies an issue for you (as the majority of lenders will no longer accept sale of the property as a verifiable method due to the variable issues that accompany it).

A lifetime equity release mortgage (LERM) may be the answer, if you have no means of repaying your mortgage with age/affordability an issue for standard residential lenders.

In this arrangement suitability is not based on income and there is no upper age limit, but instead is assessed on the property value and your age at application. (min age 55 for lifetime equity release, 65 for home reversion). Obviously the younger you are, the lower the max lending, as the longer the duration the lender will have to wait for redemption - so the amount offered may not be sufficient to settle the os debt with NW (unless you have sufficient personal capital you can add to the lifetime mge, to fully redeem the NW mge).

Interest on a Lifetime mge, is generally rolled up - which naturally over time will negatively affect the free equity in the property (although there is a provider whom permits monthly payment of interest, which will effectively ring fence the free equity and debt). So involving any beneficiaries/family is important in the decision making process, early redemption pens can be hefty too.

If you are interested in pursing a LERM arrangement, this is a specalist area of advice and you must ensure that you speak to a suitably qualified and authorised equity release adviser. SOLLA can direct you to independently assessed and accredited advisers (which is a voluntary assessment and accreditation of the advisers proficiency) in your area, but yellow pages will also give you details of advisers whom authough suitably qualified, have elected not to be assessed.

Unfortunately, if you are unable to repay the debt within NWs given paramaters (even if they extend the term), and/or are unable to source an alternative arrangement in that event, you may well have to face the hard facts of selling and moving to repay the os mge - as are lots of other peeps in the interest only pool whom also deferred effecting a repayment plan (which I'm not saying is right or wrong, but a choice with consequences made by the indvidual).

Hope this helps

Holly x

Thrugelmir

paulo100 wrote: »

Good replies, thanks.
I think I will be talking to them soon to gauge their position. As I have said my preference will be to continue until 70. I will be able to prove my ability to make payments so that shouldn't be an issue in itself.
No, I won't be eligible for pension credits.
I could make payments to reduce, or even pay off, the outstanding amount, it's more a case of I don't want to do so until I am older (70).
Thanks for all your helpful replies.

Putting whether aside whether another mortgage will be granted or not. You will not remain on the (current) 2.5% interest rate. Given the low savings rates available. You may find it more beneficial to plan to repay the mortgage. As will be more cost effective.

The probability is that you will have to move to a repayment mortgage. On a 10 year term at 4%. This will require monthly repayments of £1,671. You will need to prove to the NW that you have the ability to fund this.

paulo100

Excellent advise and information.
Thanks to all.

Thrugelmir

HappyMJ wrote: »

As long as you keep paying the interest then the mortgage could continue indefinitely....

A mortgage contract has a definitive end date.

By accepting the terms and conditions the borrower agrees to repay the money borrowed at the end of the term.

In not doing so. The borrower is in breach of contract. The lender can therefore seek redress, again as contained in the terms and conditions.

Cornucopia

I have recently declared to Coventry BS that I am unlikely to be able to redeem a BTL Interest-only mortgage on time, and they were very relaxed about extending the term, without cost or variation of terms.

I'm guessing that many lenders would prefer to extend the term subject to affordability and a good payment record, rather than have the cost and uncertainty of some form of repossession.

paulo100

Cornucopia
That is very interesting. Would you mind me asking how long it was before the mortgage was due to be paid off when you approached them?
Thruglemir
As I have repeatedly said in previous posts, I am not in any way suggesting that I would not pay off my loan. I could pay it off now, out of my available savings.
Once again I will repeat, I would prefer to extend my mortgage arrangement another 5 years.
If NW declined, I could clear the amount owing in any one of three or four ways, that's not an issue. Therefore dire warnings of what could happen if I break my contract with the mortgage provider are really unnecessary and superfluous to this conversation.

Cornucopia

paulo100 wrote: »

Cornucopia
That is very interesting. Would you mind me asking how long it was before the mortgage was due to be paid off when you approached them?

About a year on a 10 year mortgage. I was genuinely surprised how easy the process was - one A4 form and a confirmation letter within a couple of days.