Giving evidence of ability to buy house at end of term

rageagainstthecashmachine

Hi

For one reason or another We're stuck with Halifax and want to go onto Interest only to make life more affordable. They want evidence (and 10 quid) that we have a plan in place to pay for the property at the end of the term.

What could that plan be please? We have good pensions with the ability to release lump sums and pay in additional contributions. I'm looking at finding out the details on that. I understands that ISA's can be used (although I doubt we'd have £3k per year to pay in).

I like the idea of putting something away and having more at the end of the term to buy our retirement home in the sun (and possibly sell our UK house to help finance this). We need to find £171000 in 24 years and 4 months.

Any ideas gratefully received.

RATCM

EdInvestor

In the old days it would have been an endowment.

These days it's an investment ISA (not a cash ISA).

Open one at a discount broker (eg https://www.h-l.co.uk) and invest the money (4k for a mini ISA or 7k for a maxi ISA, or whatever you can manage) in equity funds. Top it up every year.

Tell the Halifax that is what you plan and that you also have tax free cash from pensions and they will be quite happy.

[Oh and don't forget to actually do it!]

JoeK_3

EdInvestor wrote: »

In the old days it would have been an endowment.

These days it's an investment ISA (not a cash ISA).

Open one at a discount broker (eg https://www.h-l.co.uk) and invest the money (4k for a mini ISA or 7k for a maxi ISA, or whatever you can manage) in equity funds. Top it up every year.

Tell the Halifax that is what you plan and that you also have tax free cash from pensions and they will be quite happy.

[Oh and don't forget to actually do it!]

I wish giving advice in the real world was this easy.

1) Don't ask about the clients risk profile but put them into equities anyway.

2) Continuously recommend the same broker in all posts.

3) Don't bother to find out about the clients pension arrangement or how much tax free cash they receive and when will the mortgage finish.

I suggest that people making recommendations in the forum should be qualified to do so.

But I know that you mean well.

JoeK

silvercar

It's called responsible lending!

We were asked a similar question (not by the Halifax) and wrote, "future lump sum payments including bonuses and possible inheritance, alternative is to sell property and use equity to downsize."

EdInvestor

I wish giving advice in the real world was this easy.

1) Don't ask about the clients risk profile but put them into equities anyway.

Err, we are talking about a 25-year investment horizon.

2) Continuously recommend the same broker in all posts.

That's because it's the cheapest.This is a money saving site.

There are a few others: https://www.cavendishonline.co.uk https://www.chelseafs.co.uk ,
https://www.bestinvest.co.uk .But they are a bit more expensive.Some IFAs even claim to be cheap but as they don't advertise, finding them is a needle in haystack matter.

3) Don't bother to find out about the clients pension arrangement or how much tax free cash they receive and when will the mortgage finish.

The OP has already figured that bit out.

I'll just add that the idea of the suggestion was to tell the Halifax what they want to hear - as that's what the requirement is at present.

There is an obvious alternative to taking a long term investment risk to repay the mortgage - and that is to overpay the i/o mortgage,or switch to repayment later on, when circumstances allow.