Interest Only Mortgage due to finish next year 2020 but there is no way we can pay it off

michieluc

My husband and I have an interest only mortgage from 2005 - which is for £130k. House is worth approx £190K.

I am 59 - husband is 49 - although I earn the most, and I am expected to work for at least another 7-8 years. No savings as such.

What is our best course of action? Between us we earn around £70K - however we both have credit cards which are quite high and not an excellent credit rating as we have had ccjs in the past. Mortgage is with Santander?

Any advice would be helpful.

Thank you.

[Deleted User]

I'd have thought getting another mortgage would be a good idea - but this time, with some kind of repayment vehicle.

However if you have no savings, you have no disposable income so are you actually able to pay off the capital?

Your not excellent credit rating has no meaning. What is in your history that you consider problematic?

[Deleted User]

Hi,


if no kids, just the two of you, downsize, be mortgage free.

BoGoF

Either remortgage to repayment or sell.

Do find it staggering that on £70k between you and IO for 14 years that you have all that debt. What is your monthly mortgage payment? Even at 3% that is only £325 per month.

michieluc

Obviously we haven't been earning £70K since 2005 - it is only recently that the salary has been this. The mortgage is around £500 a month.

We do have a daughter living at home.

ACG

How much are the balances on your debts?
How much are you comfortable paying each month? By comfortable I think you need to be realistic here in that you are going to notice a drop in your lifestyle. You have been living beyond your means, you are going to have to make some cut backs.

The alternative is to downsize your home.

dano17439

Can I ask why you haven't been saving since 2005 to enable you to pay your mortgage off? Was in in your plan but never got round to it? is it only now you've started to worry about it? Did you actually know how Interest only mortgages work?


For me option 1 would be to remortgage, but given your age you might struggle with getting another long term deal i.e. 10 years plus

As others have said, if you do/can remortgage, be prepared that your month mortgage payment to increase dramatically


2nd option would be to sell up and pay off the mortgage. Sounds like you would come away with a nice bit of equity, but of course nowhere to live, unless you of course bought again so sounds like you would have to downgrade, or start renting...but as you are approaching retirement would this be the best option?


Good luck in your journey

getmore4less

The mortgage is just part of the picture.

To sort that out you need to get a handle on the bigger financial picture and put a plan in place to start to sort things out.

best place to start is
Debtfreewanabe and your SOA.
https://forums.moneysavingexpert.com/forumdisplay.php?f=76

https://www.lemonfool.co.uk/financecalculators/soa.php

You now have a healthy income(£4k+) to tackle the problems along with cutbacks and more control over spending there will be a solution but depending on the size of the other debts those cutbacks may need to be severe.

One of the first things to look at will be why your mortgage £550pm that's 5% on £130k which is VERY high for <70%LTV

The second issue with this £130k and your ages is it costs a lot more to pay off over shorter period.

The analysis and restructure of your finances will need to find £1.5kpm to put towards this debt to have a chance of clearing it in 8y.
you may have longer options but even 15y will need over £800pm

It may be time to review your accommodation needs but even then you will probably still have a mortgage.

SonOf

To be honest, there has to be wider issues here that we are not aware of from the posts you have made. So, many more questions exist that will need to be answered before sensible advice can be given.

For example,
why did it take you until the final year to try and resolve this?
You have debts and no savings but a small mortgage payment. This suggests you havent been living within your means, so a budget analysis should be carried out

Fixing the mortgage issue is like putting a plaster on a broken leg and hoping that will fix it. You need to look at the wider picture and try and deal with the whole problem. Not just a bit of it.

foxy-stoat

Sell and down value.

If you had saved £650 a month from 2005 you may of have enough to settle the mortgage by now with the added interest....the time to ask your question would of been 15 years ago.

phillw

michieluc wrote: »

What is our best course of action? Between us we earn around £70K - however we both have credit cards which are quite high and not an excellent credit rating as we have had ccjs in the past. Mortgage is with Santander?

Any advice would be helpful.

I would speak to Satander now about switching to a repayment mortgage.