DWP SMI Loan Conversion

LharkStar

So, can you explain to me precisely what you meant by "extending the mortgage into retirement on an interest only basis"? I think I may have misunderstood. I am paying interest only right now as it is, indefinitely. I will hit retirement age of 66 before the mortgage term ends, and then when it does end I will be 69... at which point I am expecting that I will have to sell the flat, pay Santander the amount outstanding, and take off with my equity?

BorisThomson

LharkStar wrote: »

So, can you explain to me precisely what you meant by "extending the mortgage into retirement on an interest only basis"? I think I may have misunderstood. I am paying interest only right now as it is, indefinitely. I will hit retirement age of 66 before the mortgage term ends, and then when it does end I will be 69... at which point I am expecting that I will have to sell the flat, pay Santander the amount outstanding, and take off with my equity?

They can extend the term if they choose to, so your mortgage term will continue past retirement age. You'll continue to pay as you are doing now, at whatever interest rate is offered to you at the time. As it's Santander that rate will not be great, as they don't tend to offer the more favourable deals to interest only customers.

Remember that when you sell you'll need to pay what you owe to the DWP. If interest rates stay low that will be £26,000. If that rose to (for instance) 5% after five years, the figure would be around £30,000.

gbhxu

Just a though..........................

Is it legal for interest to be charged?

There has to be some form of signed credit agreement for interest to be payable!

LharkStar

Thanks very much Boris for that clarification. I actually had a hypothetical conversation with Santander about this this morning, and it's absolutely right! I'm really surprised, I had no idea that this may be an option for me when I am older. Although it is ten years away it certainly puts my mind at rest a bit with regards to the future. I always thought that the moment the term is up I would have no choice but to leave immediately! I realise things may change by then in some way, but it's reassuring to know that that could very well be an option for me, so thank you.

p00hsticks

gbhxu wrote: »

Just a though..........................

Is it legal for interest to be charged?

There has to be some form of signed credit agreement for interest to be payable!

It's not compulsory to receive SMI - if a person wants to take advantage of it in order to see them through a period of low income then presumably they will be asked to sign something to accept that it is a loan with interest and needs to be paid back at some point in the future.