Will my friend be homeless?

Smileyperson50

Hello all. My friend is 65 and his current mortgage agreement expires in 2 years. At that point they will still owe the mortgage company approximately £55,000. He thinks he will not be able to get another mortgage because of his age and fears the mortgage company may make him sell his property.
Is this possible?
He is retired, claims a private and state pension and works part-time, so still has earning potential.
Any suggestions / advice gratefully received.
He hasn't spoken to his mortgage company as he is afraid of what they may say.
Thank you for your time.

HappyMJ

It's possible ....but....as long as he continues to make the mortgage payments they won't force him to sell for quite a while.

Let_Us_See

If their guaranteed income is sufficient to support the mortgage balance then it is quite possible to re-mortgage to another lender (often to 75 years of age). It may be possible to extend the term with existing lender, but often at the end of the mortgage term lenders want the mortgage fully redeemed. Although there are two years remaining, go find a good broker now to discuss possible options.

Trivial_pursuit

Based on what you have said it would indicate that he has an offset mortgage,if your friend is generating enough income from a pension to be able to pay back the capital also. Then he should contact his bank to switch type of mortgage. As it is in the best interest of his mortgage provider not to force him to sell, as it generates bad press. He should subject to assessment have the ability to increase his term upto 75.

Gary123456790

Hi,

Is the mortgage interest only or repayment?

If interest only, they should have been putting money aside or in some other investment to cover the mortgage at the end of the term.

If repayment then they will drop onto the standard variable rate which may be a higher interest rate (so payments may rise) but wont make them instantly homeless as they can continue to make payments.

Gary.

holly_hobby

Yes the lender can enforce redemption at the end of the mge term, given that this was the contractual agreement your pal entered into when he effected the mge.

The reality is, in circs such as this (ie no repayment vehicle or independent means of repayment) the lender where possible will often be flexible, and may agree to extend the mge term (subject to affordability assessment) either on a repayment basis or (if to remain on IO with no repayment plan other than by sale/remortgage), for a period to facilitate alternative arrangements for redemption.

If this doesn't suit for whatever reason, there are a couple of lenders that don't have the restrictive upper age ceiling of 75 yrs, so a longer term on a repayment basis (to make it more affordable and in the absence of a repayment vehicle) may be possible (subject to affordability during the term of course).

However, given that he will no longer be able to source an interest only mortgage without an independent repayment vehicle (unless by lender agreement) or he considers a lifetime mge arrangement (where given the current mge balance the property would need to be worth in excess of £178k), he will be looking at a new repayment mge to retain the property in the longterm.

Firstly, he needs to speak to his lender to see what options they may offer, following which he can make an evaluation of how he wants to manage the situation (including whether he wants to seek an alternative provider as discussed above), at which point he may want to engage the services of a mge broker (which will be reqd for any lifetime arrangement he wants to explore).

Hope this helps

Holly