Trouble at the end of mortgage term!!

clingfilm

Hi there I hope someone can help with my major dilemma.
Basically I bought a property on an interest only mortgage..( yes I can hear all the sighs, 'oh dears' and 'that was a silly thing to do' comments).

The outstanding balance on the mortgage currently is £195,000 with an additional £25,000 secured loan attached to it.The plan was to consolidate and convert to a repayment mortgage after a couple of years, well circumstances changed and I just haven't been able to follow it through.

The problem is both my husband and I are over 50, he's 57 and I'm 53, retirement is looming close, we have no savings whatsoever, I think we have approx. another 13 years for the mortgage to run. Between us we take home around £1,900 per month. Our mortgage payments per month is £486.00 and £270.00 per month for the secured loan.

We really need some serious help on this. One option obviously is to sell up and move somewhere cheaper but we would like to know if there are any other options, any schemes or plans available to us so that it wont get to that.
Thanks everyone in advance.
HELP!!!!!

Simon_gloster

Blimey what rate are you on?

You really should be overpaying as that's a massive debt to clear at your age.

Easiest way is to downsize and convert to repayment over a term to end before you retire.

Annisele

What's the value of the property, and when are you planning to retire?

(I ask because if the property is worth much more than your outstanding debt, there might be some equity release options open to you - but you're a little young for them. So, the retirement question is about how long you can hang on in your current state).

TrickyDicky101

What's the realistic value of your property? If it's 500k you'll potentially have more options than if it is 200k, for example.

clingfilm

Thanks for replies guys

I think/hope the property value could be around the £30000.00. Maybe I should at least get a valuation done.
I guess we were planning to retire at 65 which means my husband has 8 yrs to go and I have 12 yrs.
Good to know I have options, tell me more please!!
What exactly do you mean by 'how long I can hang on in current state'

Annisele

Unfortunately I don't think equity release will be an option with a property value of £300k. I was thinking you might have been able to use an equity release product to get enough money to repay the outstanding mortgage, then you'd have been able to live in the property until your death without paying any more mortgage payments. But as things stand, you don't have enough equity to release.

For example, Aviva's equity release calculator shows that on a £300k house with a 55-year-old borrower, the most it would let you take is around £62k - which is nowhere near enough to repay the existing mortgage. (I'm not recommending Aviva, I'm just using it as an example of a firm that provides equity release).

I assume the secured loan is already on repayment, but that still leaves you the best part of £200k to pay back. A repayment mortgage over 8 years is just plain unaffordable (even without any interest it would cost more than your monthly take home pay).

What do you have in the way of pensions? Will you get a lump sum on retirement? And will you have enough income to continue to support your mortgage?

If your pensions aren't enough to keep the mortgage going, then you pretty much only have two choices: increase your income (by working longer, taking additional jobs now, whatever) or reducing your expenses (by selling your house and downsizing).

Ideally you'd want a combination of those things. If you could get second jobs/more hours, live like paupers for a few years, and downsize to a smaller property, you'll be in a much better position. But I do appreciate all of those things are easier to say than to do, and doing all of them is a pretty big lifestyle change.

Edit: Downsizing is likely to come with its own problems. I doubt you'd get a new mortgage for anywhere near the amount you currently have - if you're retiring at 65, a new lender might only lend you the amount you could repay on a repayment basis over the next 8 years. That might mean downsizing to somewhere that costs £100k or so (£70k ish of equity plus a small mortgage) - which may be a step further than you're willing to go.

Ultimately, selling up and renting might be the most viable option.

Let_Us_See

Are you also paying IO on ther secured loan?

Your husband is 57 years and you state there is still another 13 years to run on current mortgage term. Unless your husband is self-employed, how did the lender or broker confirm maintaining monthly mortgage payment into his retirement?

Unfortunately, there is no magic solution, and without further information, all I can suggest as an alternative to downsizing is to maximise capital repayment whilst working and hope the oustanding balance of mortgage can be covered by a lifetime mortgage at the appropriate time.

clingfilm

Thanks for the comments and help, it does look like we are up the creek pretty much without a paddle. have definitely thought about getting second jobs and increasing income., the mortgage is in my name only, I bought the house before we got together, it is still only in my name because the mortgage company reckons I need a signed paper by a solicitor to add his name, well that isn't priority to spend money on right now.

Thrugelmir

Well at least you have some equity in the property.

Pay off what you can over the next 5 years and then reappraise the situation. In the meantime start looking at options for property when your husband retires.