Mortgage ending but trouble raising new one

htrj

Hello, I'm writing this on behalf of my Mum.

Her interest only mortgage deal is coming to an end early 2017. Although she has an excellent credit reference, a healthy income and about 75% equity in the house she is in her late 60's and her age is apparently against her when trying to source another mortgage. The current mortgage provider "The Mortgage Business" will not start any new mortgages but have inferred that she might be allowed a few extra years if needed.

She would like to stay in this house indefinitely if she can but wants to know what she can do to prepare for this term coming to an end. What is the likely outcome here?

betmunch

What repayment vehicle did she say she would use when she took the mortgage?

If its not sufficient or simply doesn't exist she is likely going to need to change to repayment with a lender which allows a higher than usual maximum age.

Failing that she could investigate equity release mortgages to see if there's a way forward there

Senior_Paper_Monitor

All depends on the actual figures - but should be a number of options based on your outline (very) info - find a broker

Cornucopia

Need to know the figures to know the scale of the issue:-

- Value of property now
- Outstanding mortgage amount
- Value of any savings/repayment vehicle (and when available)
- Confirmation that the amount required is less than about 4x salary.
- How long salary will continue for.
- Pension

htrj

The house is worth £800k with about £600k equity, £200k mortgage.
She has a income of £52k per annum. 3/4 of which comes from rent from rooms and outbuildings at her home with the remainder from her pension, so l would say little chance of that incoming ceasing.

When she took the mortgage offer she intended to renovate this property and then sell it to pay off the mortgage. Several problems have prevented this such as long running neighbour dispute and a well known controversial planning application for a neighbouring field. Although she tried to sell it a few times the purchaser always back out when they found out about those problems. As a consequence of these problems most of her savings have been swallowed up by legal fees and she now has about £10k in cash and about £25k in other debts.

Can anyone suggest a lender, or a broker who could make an offer?

Cornucopia

Looks like you're going to need a good broker.

The figures look good, but I can see them discounting the rental income.

htrj

Thanks, shes been to a few brokers but none have wanted to help. As a result of your advice I'll get her to keep trying.

Out of interest why would they discount the rental income? Also do you mean they would just reduce the rental income declared or not count it at all?

betmunch

I would expect it to be discounted as it would be considered self-employed income and you would have to convince them she could work for the entire mortgage.

I would imagine the brokers you spoke to are either not very good. Or they are good but just don't want to be involved. Sad but true.

I would only do a mortgage past age 75 if the pension income supported it alone.

You need a broker that is specialised in mortgages into retirement so he can protect both himself AND your mother

silvercar

I would have said that the easiest option is to move; enough equity there to buy a decent home.

But then you said there are difficulties in selling and the rental income is providing an income that would be lost if she moves. Any opportunity for family to chip in? Possibly in return for a charge on the property.