Mortgage Shortfall

Klorathy

We have a £180k interest only mortgage, ending in 7 years time when I am 65. I had to retire early, so converted the mortgage to interest only 6yrs ago, ) The only possibility for paying it off is to sell the house ( it's worth £300K + currently), unless we inherit (possible, but can't rely on it).
Is it worth contacting my existing lender to ask to extend the interest only term? (I have a pension of 17k pa so can keep paying the interest)
Are there any mortgage / financial advisors that specialise in this area?
There must be a lot of people in this kind of position - what have others done?

dunstonh

Is it worth contacting my existing lender to ask to extend the interest only term? (I have a pension of 17k pa so can keep paying the interest)

Without a repayment vehicle or means to repay, a lender is likely not to extend the mortgage. The regulator has changed the way interest only is viewed and interest only should not be used as a means to afford a mortgage repayment other than in short term issues.

There must be a lot of people in this kind of position - what have others done?

In the scheme of things, not that many but you are not alone. Your problem is not one of short term hardship that can be helped by moving to interest only for a few months. Your move to interest only has just delayed the inevitable. The lender is unlikely to want to delay it further when there is no reasonable chance of you ever repaying the capital. Your debt is 10x more than your income.

You could ask them and they may surprise with an answer. However, your main options are:
1 - sell up within the next 7 years
2 - move to equity release.

propertydog

Do you live in this house, or is it rented out?

Thrugelmir

You may struggle once interest rates start to rise. So perhaps worth making long tern plans now.

Klorathy

Hi thanks for that - it is rather as I suspected. We do have my wife's income of £23K as well. Given that we can continue to pay the interest until we die as it were, is there no way of making an arrangement to sell the house on the death of one or both?

dimbo61

Unless you have a huge life assurance policy what difference does it make if one of you dies?
Time to look at selling up in the next 3/4/5/6 years and buying/renting a place you can afford

getmore4less

the time to deal with this was 6 years ago 180 over 13 years was 1kpm less than now with 7 years

was there a pension lump sum
could you have delayed your pension and live of the wifes income etc.

I would review your housing needs etc might be time to relocate somwhere cheaper free yourselves.

any family looking to inherit from you that would be prepared to support the place?

could try the lender but be prepared that it will not be lifetime even if they will extend.