Help! Stuck in a 40 year Mortgage with Halifax

seven-day-weekend

Sorry, never noticed that link - too early in the morning!

Debt_Free_Chick

OK - it sounds as though you only pay the interest to Halifax and you will need to find £42,000 when the mortgage runs out.

I assume you don't have a private pension plan which is going to pay out in the future. If you do, then get an illustration to see what it will pay out - you may get enough cash at retirement to pay off the mortgage. This is how this mortgage was probably intended to work - at retirement, you would get cash from the pension plan and this would repay the mortgage. But as you are now retired, perhaps you're already receiving all your pensions?

You say you've paying extra to Halifax - how have they treated this? Have they been using these payments to chip away at the £42k you owe? Have you had a statement from them lately to show how much you owe, now? Or is that where you got the figure of £42k?

Suggest you ask Halifax
1. How have they used the extra payments you've been making?

2. What is the current redemption figure (this is the amount you would need to pay today, to clear the mortgage).

Your options are

Remortgage - switch your mortgage to another type e.g. repayment. This way you will pay off some of the amount borrowed (£42k) as well as the interest. But your monthly payments will go up - can you afford this?

Remortgage to another interest only deal, but only if the interest is lower or you get a good deal. You will still have to pay off the £42k at the end of the mortgage term, though. And your income may mean that you don't get the best deal.

As for paying off the £42k, you have three (possibly four) options.

Save money now, so you have £42k when the mortgage runs out.

Don't save, but when the mortgage runs out, sell this house and buy another one for about £42k less.

Switch to a repayment mortgage, which pays off the £42k gradually.

Perhaps you still have a pension plan to pay out in the future?

Get a lifetime mortgage, where you never repay the amount borrowed, but on death, the property is sold and the loan repaid from the price.

Lots to think about! You either need to research each mortgage option or go to a whole of market mortgage broker.

HTH

EdInvestor

Hi Larry

Puffalump59 wrote: »

I have a mortgage with the Halifax which is called a retirement pension plan,and it is a 40 year mortgage. I am retired due to ill health after an accident at work and after suffering from a stroke nearly 18 months ago. ....all i know is that after 40 years has passed i will have to find the money for my mortgage all over again albeit only £42,000.

Some questions.

How much is your home worth now? If you sold it and paid off the 42k, would there be enough left to buy you a new home outright with no mortgage?

When is this mortgage due to be paid back? Is it 40 years from now? Or is it possibly in 17 years time, when you will be 65?

In the past did you contribute to any private pension, which would mature when you were 65?

If not, what was the original plan for paying back the mortgage at the end of the 40 years at the time you took it out, before you got sick and had to retire early?

regularsaver1

sometimes RHP was offered as an alternative to someone who wanted to go interest only, or was stuggling with payments. There must have been a reason for changing to RHP??

The interest only payments are made. Any additional payments will reduce the capital. And as I said before, if you die during the term, the Halifax get their money back from house and your family will get the remaining equity as Halifax have no share of that, just what is owed to them. If after 40 yours you are still around, then an arrangement will be made.

Sometimes RHP mortgages were taken as a short-term option, as some people possibly change their homes and downsize, with possibility of clearing mortgage before.

christabell

Dear Puffalump59,

Sorry to hear about your ill health. Have you applied for all the IB you are entitled to? Check out https://www.entitled.co.uk As you had had a stroke, you may be able to claim for additional care/mobility. As Mr. Tesco says...every little helps.

Good luck

cecmfs

Clearing up other posts, RHP's are still available with Halifax, I did one last week for a client (I am an IFA). Would doubt it is an RHP as the minimum age at outset is 65, or 60 will be considered if both partners are retired fully and have no earned income. The phrase "earned income" the key one for RHP, as you are not accepted for them if you hae it!

Would imagine that you have a 40 year term I/O loan, RHP's are set up for 40 years, with my joke to the client (at age 65) that if you get to the end of the 40 years, you get another 40 years! The debt is then paid of by the estate, there is no pretence of an ISA/PEP/Pension/Endowment paying the debt off. Think this has been set up incorrectly from the start. Suggest going to FSA website for list of IFA's in your area, as Halifax offers a retention scheme to IFA's which does allow them, with your authority of course,to key up the information on your mortgage. If it is prohibited, their friendly Halifax rep can get them info, again with your authorisation.

In short, I don;t think you have an RHP, rather a long term I/O, which has obviously not been very well explained by HBOS staff, which is not uncommon. Get an IFA on the case!

regularsaver1

Yes I stand corrected - brokers/IFA'S can do RHP for Halifax, but not inhouse. The reason being is that in order for a mortgage adviser to be compliant, they have to be observed and do enough of these mortgages which they do not. Whereas Halifax are not resposible for an IFA compliance and advice