Interest only mortgage help

Tash

We have a IOM of £180000
Property worth £375000 approx
4 years left on mortgage 
Both aged 58
Want to downsize in 2 years
Was planning on  using lump sum pension to clear mortgage but not sure if best idea
We want to sell, clear mortgage and want to buy new property. 
We would have approximately £190000 deposit.  How likely would we be able to get a 10 year mortgage of approximately say £75000? 
Husband earns £55000 but I  no longer work. No debts, small credit card (£600) 
Is this feasible? Worried sick we will have to sell and not be able to afford anywhere else.  Please help

tacpot12

I think you will be able to get such a mortgage. Your LTV will be about 28%, and his state retirement age will be 66 or 67 so an 10 year mortgage would be finished a couple of years after his state retirement age and he has the lump sum from his pension to clear the outstanding balance if he retires at or just before the state retirement age. Using a lump sum from the pension to clear the mortgage is not a bad idea UNLESS you need the lump sum to live on or for other things you want to do. You can even fix your mortgage rate for 10 years to ensure that the amount you pay per month will never go up. Any pay rises he receives over the next 10 years could be used to bring the mortgage term down. 
 
However, if you husband earns £55,000 a year and hasn't managed to clear an IOM mortgage of £180,000 I wonder what your outgoings are? He should have been able to clear in about six years!

Could you get a job so that you can make additional payments on the mortgage? Even a part-time job might pay enough over the cost of travel to make a difference - if his salary is already covering your existing outgoings, income from any work you go can all go to clear the mortgage. 

Tash

Excuse my ignorance but what is LTV?
As to where money goes, try 3 daughters,  uni fees, cars etc. Stupid amounts of insurance policies....not sure if all are needed.

Tash

But thank you for your reply

Windofchange

Loan to Value - i.e how much your house is worth versus the loan secured on it. 

Thrugelmir

Tash said:

As to where money goes, try 3 daughters,  uni fees, cars etc. Stupid amounts of insurance policies....not sure if all are needed.

You've a few years in which to review your finances and cut out the waste. Anything you can direct towards reducing the mortgage will aid your cause. 

amnblog

You are saving you wish to take borrowing to £255,000 total?

If so, why?

monetxchange

Tightening up your budget to get as much paid on the mortgage as possible should be your goal in the next few years. Debt and mortgage free wannabe boards on here are full of good advice on where you can maximise your money.

MWT

amnblog said:

You are saving you wish to take borrowing to £255,000 total?

If so, why?

I read that as sell current house to net around £190k after clearing the existing mortgage (£375k - £180k + costs)

New borrowing £75k with the £190k as deposit

Tash

MWT that's correct.
Sell house 375
Pay off loan 180
Equity left 190 approx
New loan 75?
Hopefully this is possible 
Buy new house

grumiofoundation

Will you be able to afford the repayments on new loan versus what you are paying now? (Numbers will vary depending on interest).

180,000 at 2% on IO - £300
75000 at 2% on repayment over 10 years - £690 

so that’s an extra ~£400 per month you will be paying versus now.

Assuming you can afford this (Don’t see why you wouldn’t be able to on £55k And if you can’t - how are you going to pay mortgage?) so why not start now - that’s £20000 (not including interest) you can overpay/save in next 4 years.