extending term of existing morgage

thrifti5

Hi All, as a first time forumite please bear with any mistakes with this post. We have an interest only mortgage with just under 8.5 years left. Having sold our under performing endowments several years ago, we accept we will probably have to ultimately sell our family home to pay off this mortgage. We have a good amount of equity(about 60%) and have not missed any mortgage payments. We would like to extend the remaining term to about 15 years to enable us if possible to start paying off some of the capital and put us in a better position before downsizing. My husband is coming up to 53, I'm 55. The issue is our joint incomes have dropped significantly since we first took out this loan, plus my husband is now self employed so we wouldn't pass the new affordability criteria. Does anyone have any thoughts on if we stay with our existing lender will they still do a full financial search to just extend our exiting loan? Also, if we are refused an extension, is this likely to put a red light on our account for any other improved deals, fixed rates etc? Be grateful for any feedback.

MortgageMamma

Hello

How do you know you don't fit affordability criteria? Have you spoken to an adviser previously? Do you have any company or personal pensions?

thrifti5

Hi- Thanks for your response MortgageMama, we arranged our initial 5yr fixed rate through a broker, as that finished the broker contacted us. I explained our circumstances and they couldn't help and just suggested we try and opt for another fixed deal with out existing lender as they are unlikely to do a full financial search. In fact it looks like we could apply for a 2yr or 5yr fixed rate online, but ideally we would like to extend the term for the reasons stated in my first post.


Our mortgage is just over 200k, our joint incomes are £30k. We don't have any private or company pensions of any significance.


In your experience will they do a fuller search if we ask to extend the term from the current remaining 8.5 years to 12 or 15 years? Both my husband and I expect to continue working as long as possible given our current pension provision.


Thanks again in advance for any advice from forumites.

Thrugelmir

Why don't you start overpaying the mortgage immediately? Even it's only nominal amounts. Extending the term does nothing in the short term to help your financial situation. As the lender is unlikely to grant an interest only mortgage. With your current level of income a repayment mortgage is totally out of the question. Seems as if downsizing sooner rather later may be the most optimal route. As w ith a debt of that size . Increasing interest rates may potentially be your ruin.

dimbo61

Well I hope you have plenty of equity in your home and house prices are climbing in your area.
Can you. Overpay by say £500/750 or even £1,000 a month.
If you are making regular overpayments and have reduced your monthly ( Interest only) costs by taking a cheaper long term fix you are showing to your lender that you have Not buried your heads in the sand.
In 8 years you could have the debt reduced by £50,000 or even £96,000 if you overpay by that £1,000 a month.
Be prepared to sell up and trade down or rent if your lifestyle means you can't afford to overpay.

AnotherJoe

Having sold our under performing endowments several years ago, we ....
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".... didn't do anything to replace those, or save the money we were previously paying on the endowments, thus compounding the problem"?

Given your current earnings, I'd take the brokers advice and move to whatever deal you can on your current lender that doesn't involve them looking at your finances. And then overpay as much as possible, in effect converting to a repayment because otherwise you are just putting off the inevitable.

An alternative would be, to downsize now, getting a mortgage that fits your finances.