When a mortgage term extension is reviewed. What looks favourable?

waspsandjam

Hi.

We have a mortgage with 20 years left on it. We are both 32 and I have an application form for an extension to the term to as long as possible (35 years). The main reason for this is to invest money elsewhere whilst rates are low.

I dont want to say this so i am hoping for some advice on what would appear favourably on the form?

We are in a relatively comfortable financial situatiuon although our investment pot is relatively small and we want to grow it so we dont have to work if we dont want to in 10-15 years.

We have the following assets:

ISA cash of about £21,000, savings of about £4,000, 2 x final salary pensions, an old company pension of about £8,000, S&S ISA of about £10,000, shares of about £3,500.

And the following debt:

£11,000 on 0% credit cards. £150k mortgage. £3000 student loan.

So we arent doing too badly (especially compared to my LBM back in 2011) and our budget already balances without the lower monthly payment.

We've just had a baby so we could use this as a reason... My wife is going back to work after a years maternity but we havent been asked to declare this. I dont want to open a can of worms with the maternity thing as she is the main earner and still may decide not to go back to work.

The extension form seems to be laid out for people who want to extend because they are financially struggling. Theres also an old thread on here which mentions the banks needing to make sure the mortgage repayment is prioritised. Does anyone have experience of reviewing these forms or applying for an extension? What looks "good"? Do the mortgage company want you to have a longer term? If you can show you can pay, you are more likely to have the extension...or, if you are seen to not need the extension, you're unlikely to get it.

Any insight into the process would be greatly appreciated.

Cheers
WnJ

_Andy_

Just fill the forms in truthfully.

waspsandjam

The "facts" i.e. assets and debts have to be disclosed. No question about it. The reason box is a small box and i do like to waffle but as an example two true reasons are:

"please increase my mortgage term to the maximum as i believe my longterm investments, especially those with tax relief, will return more on the £150k than it will cost me in mortgage interest, and i'd like to make the most of this"

and:

"please increase my mortgage term to the maximum, i have just started a new family and i would like to minimise the monthly repayments to give me increased financial security"

Would the bank favour a savvy (potentially in their eyes, reckless) investor or one with a new family or are they likely to say, you dont need it, you cant have it?

_Andy_

I'd go with the latter then!

dimbo61

You maybe better asking for a 33 year term rather than 35 as you will be 67/68 then ?

waspsandjam

The mortgage company take it up to 35 term or 70 years old whichever is lower (or so i have been told by their mortgage rep).
Unfortunately 67 is going to be my state pension age now, if thats not revised up (or down hahaha) in the next 35 years!

kingstreet

We've been using 70 as "normal retirement age" for those aged 40 and under for a while now.

As it's 67/68 today, it's bound to be 70 by then, IMHO.

Thrugelmir

waspsandjam wrote: »

we want to grow it so we dont have to work if we dont want to in 10-15 years.

Not if you have a large mortgage to service.

The longer you extend the mortgage term the more likely you'll end up costing yourselves money. Now is the time to repay debt. As the correlation of rising interest rates is a fall in assets prices.

waspsandjam

As the correlation of rising interest rates is a fall in assets prices.

Thanks for taking time to reply. Hopefully my sums are reasonably tight but my crystal ball packed up so there are a few assumptions in there which could throw me (and likely a few things i havent thought of).

I am genuinely interested in this stuff though. Why are the two correlated? Is there anything to support that? By asset in this case you mean property. Increases in interest rates are likely to signal economic growth which would imply property price would increase. I didnt see prices go shooting up as the interest rates were cut....