shortfall at end of interest only mortgage

jimmy55

If only I'd had the foresight to go for 30 years instead of 25! You never know what the future holds. Listened to the radio yesterday about the Interest only timebomb. I think there will be quite a few owing a lot more than me sadly.

jimmy55

Thanks Silvercar .... yes, I've tried to keep them posted with any progress and keep up substantial payments

enthusiasticsaver

no lenders like interest only these days and the cheapest way would be to stay with your current lender. If you pay in the £11k what is the longest term they will give you and are the monthly repayments affordable?

The only other option is to crystallise your pension or sell up and downsize.

silvercar

So basically you want the lender to extend a 30k mortgage on a property worth 350k for a few years.
Something that would have been possible without question had you requested a longer mortgage term initially.

Although there is no legal obligation on the lender to help you, I would argue that not to do so would be unreasonable on the following grounds:
a)the pain to you of refusal is far greater than the cost to them of extending the facility
b) the repossession costs (which is their only other option should you not move your mortgage yourself) far outweigh the costs of allowing this
c) treating customers fairly - the mantra of lenders these days should mean that they consider on a case by case basis.

You could consider a complaint to the financial ombudsman, but you need to exhaust discussions with your lender first. In fact asking your lender for a letter of deadlock (this confirms you can't reach agreement), may encourage the lender to be more sympathetic.

Here is a recent page from the FoS on interest only mortgages with some case studies:

http://www.financial-ombudsman.org.uk/publications/technical_notes/interest-only-mortgage-case-studies.html#c

You can see that in some cases the FoS decided that the lender advised the borrower and as such could be held responsible for leaving the lender in a difficult interest only situation.

I would say it is particularly hard that just by ticking the box for a shorter term than you actually needed all this pain has been caused. Now if the lender was technically advising you on the mortgage, they could have suggested you play safe and go for a longer term.

Voyager2002

jimmy55 wrote: »

I am really looking for other possible interest only options for 5 years. I fully appreciate they are not obliged to help me as lending criteria is a whole different world to 25 years ago.

Could you not move to a repayment mortgage for the final four years?

Since interest-only mortgages are no longer offered, your willingness to pay off a bit of the debt each month could be the only way to get your lender -- or any lender -- to help you.

Presumably the four aged parents are receiving pensions, so make sure that they understand the situation and the need to contribute in order to save the house.

pennystretcher

Is your wife working? Could she take on a mortgage solely in her name?

amnblog

Sounds like with your parents in residence and an early 'inheritance' may be in order.

Have you looked at a personal loan or loans given the balance is now about 25,000.

jimmy55

amnblog wrote: »

Sounds like with your parents in residence and an early 'inheritance' may be in order.

Have you looked at a personal loan or loans given the balance is now about 25,000.

Hi, thanks but parents live independently ( one pair quite a way from us ) hence commitment of our time when something unexpected happens. The problem with any repayment loan is lack of income to pass current 'stress' tests .... hence desire for interest only for 5 years.

dimbo61

I would for the time being overpay what you can afford each month
The balance is getting smaller and the lender can see you are slowly paying down the debt

Thrugelmir

jimmy55 wrote: »

The problem with any repayment loan is lack of income to pass current 'stress' tests .... hence desire for interest only for 5 years.

Commercially not viable for the lender. Nor in keeping with current regulatory practice. For a lender to help you, you need to be seen to making a committment yourself. Without a two way trade. You'll garner little support.

Don't your children work?