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Interest only mortgages
merrydance
Posts: 653 Forumite
Hi
I have friends with an interest only mortgage that will end in 2 years. What will happen if they cannot afford to pay off the mortgage, will they renegotiate a new payment each month? Or will they have to sell their property.
Thank you
I have friends with an interest only mortgage that will end in 2 years. What will happen if they cannot afford to pay off the mortgage, will they renegotiate a new payment each month? Or will they have to sell their property.
Thank you
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Comments
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Can they re-mortgage the property for the shortfall?
They don't have to sell but they will be in default so I'd recommend a re-mortgage before the term expires. They could ask their lender for the term to be extended also before the term expires. Whatever they do they should not be ignoring it and hoping that nothing happens.:footie:
Regular savers earn 6% interest (HSBC, First Direct, M&S) Loans cost 2.9% per year (Nationwide) = FREE money. 0 -
do they have an endowment or any other sort of savings that they planned to use to pay it off at the end or did they plan on selling up?0
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Most lenders will extend for a few years if they are aware of the repayment plan. If there is no plan, then they will consider a remortgage (new term and on repayment basis) if it is affordable. If not, then they will "encourage" the person to sell the house within a period. If that doesnt happen then they can apply to repossession.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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They are aged 59 and 61 with no savings. He is a self employed electrician and she is in a low paid minimum wage job. Looks to me that they will have to sell up. Thanks for your replies0
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