Interest Only Mortgage ...time running out!!

Mustbeananswer??

Hi

I have a 60 grand mortgage on a property worth approx 100 grand.I have a feeling that the term I took it out for is due to expire in the next 5 or 6 years.....what are they likely to do please.Extend it....or ....insist I sell and pay off the mortgage??

I'm heading for 60 years of age.:eek:

Thrugelmir

Can you afford to make additional payments to the mortgage to reduce the balance owed?

Do you have sufficient pension provision in place that would enable you to extend your mortgage term into retirement?

With 5/6 years to go. There's still time to make an impact and broaden your choices.

ACG

There are a few options but it all depends on your situation and plans.
The easiest would be to overpay and pay off tha £60k in the 5 years - the reality is that is probably not feasible.
You could make overpayments and see where you are in 5 years, if you have say £20k outstanding the lender may just allow you to carry on making payments and bring the balance down yourself.

The alternatives would be to find a new lender who will allow you to do the mortgage over a longer period - age 68-70 is becoming more common now, but it relies on you working until that age.

Another option would be equity release, but I think you would need to get more equity in your property before that is achievable.

As I say, many ways of doing it but it all comes down to you. I would sit down with a broker and discuss your options.

Mustbeananswer??

I would hope that SANTANDER would take the view that there is sufficient equity in the property to not pull the rug from under me...and carry on with the arrangement.....

I have been looking at Newbuilds to possibly realise the equity in the property....full market value part-exchange.

Could be interested in equity release....but hasn't it had a bad press??

AnotherJoe

Mustbeananswer?? wrote: »

I would hope that SANTANDER would take the view that there is sufficient equity in the property to not pull the rug from under me...and carry on with the arrangement.....

There are a few posts here from people in a similar situation to yours indicating that lenders don't care about that and won't extend the loan.

jamesd

There are lenders who will lend up to age 85 if you can show that you have sufficient income in retirement to support the payments. That income can be pension income, it doesn't have to be from working.

What they can be expected to do is contact you some years before the end of term to ask you how your repayment plans are going.

Back in 2014 there was talk that Santander would offer lifetime mortgages on interest only basis but I don't know whether that arrived or not.

We don't really know enough about your financial situation to offer much broader guidance, though since you are aged between 55 and 75 you can make an extra £180-720 a year by paying into a pension then taking out the money again after tax relief is added, more if you're still working.

westernpromise

ACG wrote: »

Another option would be equity release.

How is that not just replacing one mortgage with another?

Thrugelmir

AnotherJoe wrote: »

There are a few posts here from people in a similar situation to yours indicating that lenders don't care about that and won't extend the loan.

Lenders will extend offers beyond retirement. Lenders have a duty of care. Though are bound also by regulatory responsibility i.e. affordable lending etc. Hence why borrowers need to make every attempt to help themselves as much they can. Not just stick their heads in the sand and make it someone elses problem.

ACG

Equity release only gets pad back when you pass away and the property is sold.

PaulW922

Given the debt and the short period left to repay it I think you really need to find out the true state of affairs. I have a family member in a similar situation and eventually, they resolve the matter but for a while they were being asked to repay the whole loan.

brit1234

Mustbeananswer?? wrote: »

Hi

I have a 60 grand mortgage on a property worth approx 100 grand.I have a feeling that the term I took it out for is due to expire in the next 5 or 6 years.....what are they likely to do please.Extend it....or ....insist I sell and pay off the mortgage??

I'm heading for 60 years of age.:eek:

Simple, pay off the mortgage as much as you can with your repayment vehicle. When you took out interest only the lender allows you to as chose to set up a fund like shares etc asa repayment vehicle instead of the standard repayment mortgage. If your repayment vehicle isn't going to be sufficient to repay the sum I suggest you start overpaying the extra you need. Check the conditions of your mortgage.

If you have potentially committed fraud and not got a valid repayment vehicle then it might be worth overpaying a lot. If the lender finds out they may recall the loan forcing you to sell.

Interest only mortgages were band for residential properties as so many people were lying and committing fraud. Its still rife in the buy to let community and hopefully banned too.

With this type of loan, the borrower agrees to pay off the interest each month but makes no capital repayments. Borrowers are expected to make sure they have an investment plan in place to pay off the debt at the end of the term.

http://www.theguardian.com/money/2015/sep/04/million-interest-only-mortgage-repossession-citizens-advice