Extending interest only Mortgage

jayship

My friend has a interest only mortgage with C&G which ends next year when he turns 65. However he would like to extend it for another 4/5 years.

He has an investment portfolio to pay off the mortgage but is likely to have a shortfall of £6/7K. Hence he would like to continue with the his investment in the hope that it will grow to payoff in full without having to dip into his savings. He is quite comfortable with the risk and willing to gamble.

He has a meeting with the advisor this week and will take all paperwork to show that he will be able to meet his committments in full either way. However he would only proceed if the lender would allow him to extend on the same terms.

Any tips and hints from the forum members will be appreciated.

HappyMJ

They'll most probably let him extend but on full repayment terms rather than interest only....but he should look at ways of finding the £7k needed and clear the mortgage in full even if it means selling the investments before they have reached a peak...they could always fall in value.

Thrugelmir

jayship wrote: »

He is quite comfortable with the risk and willing to gamble.

C&G might consider otherwise. As there's no guarantee as to being repaid. Lenders don't gamble.

Better to switch to a repayment mortgage. You'll need to prove that this is affordable.

jayship

Thanks HappyMJ and Thrugelmir.
My friend has more than enough cash invested in long term fixed deposit accounts to payoff the mortgage in full. It is not a problem finding the shortfall of £6/7K. However he would prefer not have to cash the investment at the moment and take a chance that it will grow in value.

Thrugelmir

jayship wrote: »

My friend has more than enough cash invested in long term fixed deposit accounts to payoff the mortgage in full.

Any new mortgage will be at current lending rates not existing.

This I suspect will make the plan unviable.