shortfall on interest only mortgage

pink_boots

I can't eat or sleep, so worried about this and don't know who to turn to. I got a letter yesterday from Santander about how I was going to pay the shortfall of £19.000 and need to know now. The mortgage is due up in April 2018. It sounds far away but really isn't as far as paying the shortfall goes.The interest payments are up to date. I am a female of 62 and retired and live on my own. I get a pension and pension credit I don't know what to do or who to see for advice. I don't know if I should just contact my lender but they are very aggressive and afraid they will realise there is a problem and think I do not have enough to pay any more and get repossessed. Any help would be appreciated. P.S. I live on the Isle of Wight and all Help centres have closed down..

happycamel_2

If you don't have sufficient income to save then you need to consider whether you could sell and move in to a cheaper property. Can you afford to switch to a repayment mortgage? You're relatively young, can you find work to pay it off?

danielanthony

How much is your house worth?

Goldiegirl

As long as the monthly payments are made on time within the mortgage term, they won't repossess.

Now is the time to start talking to them, rather than waiting until April 2018.

It may be possible to switch to repayment and lengthen the term of the mortgage (lenders generally lend up to age 75). This would give you thirteen years to repay the mortgage in full

I imagine that you've had the mortgage for some time and were aware that this was an interest only mortgage, so I was just wondering if you had given thought to what would happen at the end of the mortgage term, as this is not something that has just happened

TBagpuss

Looking at extending the term and changing £19K of the mortgage to repayment mortgage may be one option, if you could afford to pay a bit more each month. (I appreciate that if you are on Pension Credit, then unless you have any savings, re-mortgaging may not be an option)

Another possibility may be to start to plan to either down-size, or to look at equity release to pay off the shortfall, in 2018.

What type of property do you have, and how much is worth?

Thrugelmir

Is there any possibility of you obtaining part time work and repaying the mortgage. There's little the lender can offer you as the mortgage debt appears unaffordable even with an extended term. So it appears to boil down to either finding the money or selling up as the alternatives.

When the mortgage term ends then the lender could seek possession not before.

What where your plans when you retired?

pink_boots

It is worth about £150.000 but could take years to sell other sellers are in the same boat. One was on the market for 3 years with no interest in it at all.

pink_boots

To be honest with you, it was a case of, seemed so far away so stuck head in sand.

pink_boots

Hi. It is worth about £150.000 but in need of a lot of attention. I did have it on the market several years ago but only got one ludicrous offer. Also property is not selling at all. The three prisons on the Island are closing down in fact one has already. So there will be more unemployment and more houses on the market. I was considering a repayment mortgage for the 19K but again I am so scared about approaching the lender.

Nebulous2

I think you would find that Santander would be very happy to turn 19k into repayment. There is a lot of concern amongst lenders about shortfalls and knowing you are tackling it will reassure them. Ask them about extending the timescale on that portion of the loan. If they give you some options you can then work out whether any of them are affordable or not.

pinkteapot

pink_boots wrote: »

Hi. It is worth about £150.000 but in need of a lot of attention. I did have it on the market several years ago but only got one ludicrous offer. Also property is not selling at all. The three prisons on the Island are closing down in fact one has already. So there will be more unemployment and more houses on the market. I was considering a repayment mortgage for the 19K but again I am so scared about approaching the lender.

Don't be. They will not look at repossession at this stage. Your payments are up to date and there's no reason why you can't keep paying them in the short term.

They would much rather work with you to find a solution now, than wait for April 2018. If you can afford a little more per month then please do change to a repayment mortgage now. If you wait until 2018 you'll have fewer years you can take the repayment mortgage out over, and therefore the monthly payments will be higher. Plus mortgage interest rates are still good and low - get a deal now and then all your worries will be over.

Is there a Santander branch on the island? If so, maybe you could speak to someone in branch rather than over the phone, and take someone with you for moral support?