Downsize to pay debt?

beany2

Hi. Wondering what my options might be(if any) as can retire from may next year (£34000 lump sum pension), and presently on long term sickness with stress/depression and desperate to retire asap
But still owe £119k on mortgage,term remaining until 2027.
My husband will still be employed until term ends but my salary pays the mortgage which is £1170 pcm.
We have a fixed 4.78% repayment mortgage and no areas but we pay £200 pcm to step change as part of our debt plan.
Would we be best to sell the house and downsize (if we can get another mortgage?) Or what else could we do,as the thought of trying to continue to work with increasing bouts of mental illl health is getting too much to think about along with constant debt.
I am 54 and my husband 47 both working full time in public sector.
Would appreciate any suggestions, thankyou.

Thrugelmir

Certainly an option worth considering. Can you not use your pension lump sum to settle your DMP and possibly reduce your mortgage a little.

beany2

Thanks for your reply it is much appreciated. Of course I'd be willing to do this,although not sure how much we'd get the mortgage down by due to some conservatory roof repairs urgently needing attention and the fact I'm presently off on long term sickness and not sure if my condition will (a)allow my to retire early on grounds of I'll health,and if this will affect my lump sum I was going to get in may? (b) I could then afford the reduced mortgage once retired? Plus, with a history of a debt plan (although we have never missed a payment) would we even be eligible for another mortgage? We've heard people getting declined even though its cheaper. We're just really in a muddle as what's best to do.

Thrugelmir

Lenders have the responsibility of a duty of care towards borrowers. Your existing lender should therefore be at least willing to consider any proposals you may have. To aid this I always suggest being fully prepared beforehand. Draw up household budgets of income and expenditure going forward. Explain how how your debts will be repaid, how the next property purchase will be funded. In effect it's an opportunity for you to start again with a clean slate.

Behind the facade lenders are people. Properly thought out plans are an ideal way of demonstrating your seriousness to tackling your issues.

izboo

I hope you manage to find a good solution to your situation but just a quick note of caution to hopefully prevent any nasty shocks. I do not know the exact nature of your particular scheme but under many public sector pensions although you can take your pension at 55 it will be at a reduced rate (which also applies to the lump sum) to reflect the number of years before the normal retirement age that you chose to take it. However this reduction can be made up to the full pension by your employer if they offer you voluntary early redundancy or if they approve your retiral under grounds of ill health. I would advise checking your own scheme for any early reductions.
Izboo

ThePants999

Thrugelmir wrote: »

Behind the facade lenders are people.

Well, except when they let the computer make the decision, anyway

StepChange_Kirsty

[FONT=&quot] [/FONT]
[FONT=&quot]Hi Beany, [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I was looking at through the forum and spotted your post. Sorry to hear you’re on long term sickness at the moment. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]If you are considering taking a lump sum from your pension, I would highly recommend that you seek independent financial advice so that you can see what impact it will have on you and your pension. The Money Advice Service is a free and impartial government service where you can find a local Independant Financial Advisor.
[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]It sounds like you’re struggling at the moment and I can appreciate you have concerns about what might happen in the future. I would suggest getting in touch with us so that we can make sure your debt management plan (DMP) is still working for you and your partner. You may find it helpful to change the amount you're paying or even take payment breaks.[/FONT] [FONT=&quot][/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]When you call we can also see if we can help with your mortgage. We have our Financial Solutions team[/FONT][FONT=&quot] who are mortgage experts and can explore the options you have available. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Hope this helps.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Kirsty [/FONT][FONT=&quot][/FONT]

Thrugelmir

ThePants999 wrote: »

Well, except when they let the computer make the decision, anyway

As the Op is an existing borrower then one of those occasions where all parties could benefit from a mutually agreeable solution. Sometimes spending time de-risking is a more worthwhile exercise than simply waiting for the wheels to fall off.